mecu introduces a raft of fees

There has been talk all week that lenders are going to start tweaking home loan discounts, raise rates regardless of the movement in the official cash rate or start adding fees to cover rising funding costs. Yesterday the first concrete indication of such a trend emerged when mecu announced a range of new fees on loan accounts.

The Victorian mutual has introduced an $8 a month administration fee for its Basic Home Loan and a $24 annual fee for new and existing unsecured overdraft accounts.

Several loan products will have new or increased establishment fees: a new $150 fee for personal loans; an increase in the car loan establishment fee from $125 to $150; and an increase in the home loan top-up fee from $195 to $295.

mecu funds its lending entirely from customer deposits. General manager development Rowan Dowland said: "The cost of deposits is high and demand for loans has come back a bit. Margins are being squeezed."

Dowland said mecu would help customers avoid the fees, where possible. "We have members who operate overdraft accounts but don't use them. We will be encouraging them to get out of the overdraft and move to a fee free credit card with an interest free period.

"With the Basic Home Loan we will continue to offer fee free redraw. A lot of lenders charge a fee for that service now."

He said that even with the new fees mecu would meet its commitment to provide a return to members, in interest benefits and fees, equal to 10 per cent of capital.