Stick to guns on fee, banks told

A banking expert says banks should not be obligated to soften the impact on mortgage holders breaking costly fixed-term loans, despite calls for leniency by politicians.

And the banks themselves say it will usually require "exceptional circumstances" for the costs of breaking a loan to be cut.

The issue is being hotly debated as interest rates continue to tumble, widening the gap between those locked into high fixed-interest mortgage rates, and those able to access new low rates.

David Tripe, director of Massey University's centre for banking studies, said it was not up to banks to make allowances for people erring in their mortgage arrangements.

"If the politicians want to interfere in the matter, perhaps they could stump up the costs for the banks of restructuring all their financing arrangements," Dr Tripe told the Weekend Herald.

"There is a much stronger case there should be some action in relation to reducing rates."

To read the full NZ Herald story click here

Posted: 2 Feb 2009

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