Streamlining discharge process would improve productivity, benefit borrowers, says broking industry leader
Anja Pannek (pictured), chief executive of the Mortgage and Finance Association of Australia (MFAA), called for an overhaul of the current home loan discharge process during an appearance before the Senate Select Committee on Productivity.
Pannek told the Senate inquiry that fixing Australia’s clunky home loan discharge process would be a practical reform to boost competition and productivity in the mortgage market.
Pannek’s core concern is that refinancing remains “unnecessarily slow and complex”, with borrowers commonly facing delays of up to 30 days to switch lenders. She argued these bottlenecks erode competitive pressure right “at the point it matters the most – when a borrower seeks to switch”.
She added: “If the committee was to prioritise one reform, it would be to streamline the home loan discharge process. Fixing this is a direct and practical lever to improve productivity.”
Pannek detailed three main flaws in the current system:
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The lack of a clear, enforceable time frame for discharges, leaving borrowers exposed to drawn‑out processes and uncertainty
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Retention tactics by incumbent lenders, with customers or their brokers often receiving a modest repricing offer, only for the lender to come back with sharper rates after a discharge request is lodged, or even after the loan has moved.
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Inconsistent treatment of brokers, with some lenders forcing borrowers to make phone calls or provide wet signatures, even when an authorised broker is already handling the refinance.
Pannek called for a mandated maximum discharge period of 10 business days to replace today’s extended timelines, which she says cost borrowers around $44 million a year in lost savings.
She also called for a “best available offer” rule on repricing, requiring lenders to put their sharpest rate on the table upfront rather than using staggered offers to stall switching. She argued brokers should be universally empowered to act on behalf of clients in the discharge process, under clear, consistent rules.
Together, these changes, she contends, would materially reduce friction, strengthen competition and ensure borrowers can more readily access the benefits of refinancing.
Read more: Mortgage brokers sweeping up as refi boom powers ahead
Pannek told the committee the MFAA is not seeking to scrap the 3% serviceability buffer, but to “review the flexibility” of it so it can better reflect different rate environments and borrower circumstances.
She stressed “the buffer as a principle has played an important role in… the veracity of lending overall”, particularly in a rising rate environment, but argued it for a “dynamic buffer in upward or downward cycles” and better use of the existing ability for lenders to make exceptions where refinancing would clearly put a borrower in a better position.
On regulation, Pannek said the MFAA accepts the post‑Royal Commission consumer protection architecture and is not recommending any changes to existing frameworks.
But she would like to see efforts made to address burdensome duplication.
Most brokerages are small businesses of one to two people, Pannek reminded, who end up “reporting the same information over and over again” to licensees, aggregators and regulators. She urged the for ability of reports to be used across multiple requirements to cut this burden.
Pannek also urged policymakers to “stay the course” on Open Banking, saying the Consumer Data Right in home lending is already improving productivity.
