Banks which charge unfair mortgage exit fees face a crackdown from the Australian Securities and Investments Commission (ASIC).

From July 1, ASIC will also have the power to go after institutions which seek to rebadge current exit fees as upfront entry fees.

Treasurer Wayne Swan and Financial Services Minister Chris Bowen said these new powers would make it easier for borrowers to switch to a competitor offering a cheaper rate, providing a major boost for competition in the mortgage market.

"Currently, some banks are using mortgage exit fees to lock customers into their home loans," Mr Swan and Mr Bowen said in a statement on Sunday.

"Exit fees can be so high that there is no incentive to switch to another lender, even if they are offering a substantially lower interest rate.