Consumers are being “ripped off” by having to cover lenders mortgage insurance and it has to stop, said Finance Brokers Association of Australia
CEO Peter White
The industry veteran has been advocating for disclosure and portability in the LMI space for more than three years, but hopes the new government will make change in the next year, he told Australian Broker.
While FBAA recognises LMI as a necessary insurance, it has fought for a long time to remove the restrictive and unfair nature of it.
“We think that if we change LMI and its conduct and its lack of disclosure this will mean a more fluid marketplace for the whole industry. The refinance marketplace will become more active to what it is today because there is no barrier to impede the transaction, because you don’t need to pay another $20,000 to $30,000 for LMI.”
Issues surrounding LMI will form a large part of FBAA’s submission to the Murray Inquiry, which is due end of next month.
While LMI disclosure has already been drafted into a key fact sheet under the NCCP, there are other issues, such as borrowers having to pay LMI twice – especially to Genworth Financial and QBE – when refinancing, said White.
"We want the lenders and insurers to take this on board and do something for Australian borrowers. The industry is dragging their feet because they don’t want to do it.
“People have to know, they are entitled to a refund under certain conditions, and it should be publically disclosed.
“It is just a rip off and it is not fair. We want fair play. We’re all big boys and girls, let’s all play nicely together and have it fair for the borrowers.”
White is looking forward to tackling the big issues in a year of change for the industry.
“I’ve never been shy of a fight, I used to teach martial arts when I was younger. So when it comes to taking them on, I can do that.”
Some lenders, such as Liberty
and Homeloans, have recently offered loans with no LMI, aimed at first home buyers.