Credit union and building society mortgage fees $300 cheaper than major banks: RBA

Borrowers can save around $300 in fees over three years by taking out a variable rate mortgage with a credit union or building society compared with a major bank, research by the RBA has found.

Average fees for a mortgage with a building society or credit union over three years are $803 compared with $1,102 for major banks, $1,160 for other banks and $1,006 for other lenders (non-bank lenders), according to a new paper by Jessica Pratten from the RBA’s Domestic Markets Department.

The fees comprise home loan establishment fees, home loan service fees and loan discharge fees (excluding mortgage exit fees which are banned on variable mortgages).

The figures are based on a $250,000 loan to owner-occupier discharged after three years and includes standard variable and package products and are  a  weighted average based on the share of housing credit for each type of institution.

Since October 2010, the major banks and credit unions and building societies have cut mortgage fees by $19, other banks have cut them by $70 and other lenders by $194.

The major banks have cut services fees by $89 over this time frame but raised establishment fees ($8) and discharge fees ($62).