Six months after it decided to scrap exit fees on its home loans, NAB is set to spark another battle for market share in the mortgage market by offering to pay $700 towards the exit fees of customers switching from Commonwealth Bank or Westpac, which have not yet scrapped exit fees.
But while competition around exit fees should help business owners find a cheaper mortgage provider, there are no moves to offer a similar deal for business loan holders looking to switch.
The decision by NAB to lure new mortgage customers with exit fee subsidies will be costly, but the bank is confident the push for market share decision will be a benefit.
"It's a sound commercial decision and I'm very confident that we'll continue to grow and that we'll ensure that it makes a lot of business sense," Lisa Grey, head of personal banking at NAB told the ABC on the weekend.
NAB also confirmed this morning that it does not charge exit fees on business loans.
But Christopher Zinn, a spokesman from consumer group Choice, said that while the offer of $700 may be attractive, consumers need to ensure they’ll benefit from the switch in the long term.
"If you really crunch the numbers you may well find that there may be another offer, even if you pay an exit fee, over the life of the loan would save you money” he says.
However, Zinn says NAB’s actions are to be applauded.
“NAB saying they will do this is really the nail in the coffin of exit fees.”
But despite the signs of fresh competition in lending markets, business borrowers won’t be able to access the same exit fee subsidy deal.
“The banks fight for consumer customers harder than they fight for business customers.” Zinn says.
“Unfortunately for small business, this means they often miss out on these offers” he says.
Next year new laws will be put in place to eliminate exit fees on new mortgages, but the laws will not affect existing loans.
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