Banks profit from exit fees
June 11th 2010 04:00
Banks made $5bn in establishment and exit fees last year from customers switching from fixed to variable rate loans.
"The increase in housing fee income was driven by establishment and early exit fees, with the available information suggesting that break fees on fixed-rate loans accounted for a significant proportion of the overall growth in fees," the RBA said.
"A number of bank customers chose to refinance their fixed rate housing loans with variable rate loans, given the significant fall in the cash rate during the banks' 2009 financial year."
Figures from the Reserve Bank of Australia indicated that banks earned 12.7bn in total fees last year, an increase of 9%, from residential and business lending charges.
The amount earned on fees from home loans increased by 17% to 1.23bn, while personal lending fees grew by 14% to $522m and credit card charges went up by 8% to $1.43bn.
"The increase in housing fee income was driven by establishment and early exit fees, with the available information suggesting that break fees on fixed-rate loans accounted for a significant proportion of the overall growth in fees," the RBA said.
"A number of bank customers chose to refinance their fixed rate housing loans with variable rate loans, given the significant fall in the cash rate during the banks' 2009 financial year."
Figures from the Reserve Bank of Australia indicated that banks earned 12.7bn in total fees last year, an increase of 9%, from residential and business lending charges.
The amount earned on fees from home loans increased by 17% to 1.23bn, while personal lending fees grew by 14% to $522m and credit card charges went up by 8% to $1.43bn.
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