Rams faces action over ‘unreasonable’ exit fees
Victoria's Consumer Action Law Centre is running a test case in the Victorian Civil and Administrative Tribunal that it hopes will set a precedent over unreasonable break fees on home loans. The case is being brought by Emily Hamilton against RHG Limited, formerly Rams Home Loans. The case concerns a low doc loan. Under the Consumer Credit Code lenders must charge exit fees that reflect costs. In the case of Hamilton her break fee with RHG is $12,000, though the size of the loan is unclear. Previous research by InfoChoice has identified RHG as having some of the largest break fees in the market. Hamilton plans to argue that the early termination fee and the interest rate changes that have been made are unconscionable and unreasonable. In the case of fixed-rate loans, break fees may include the lender's cost of meeting their own fixed-rate funding. Break fees on fixed-rate loans are rising at the moment, given the steep reductions in money market rates in line with cuts to the RBA's target cash rate.
Source: The Sheet