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CBA borrowers stung in switch
The Australian 12:00AM February 14, 2018
Commonwealth Bank will hit some home loan customers with tens of thousands of dollars extra in interest charges by extending the life of loans.
The lender, which has the biggest share of the nation’s mortgage market, has notified borrowers of changes to repayments and to redraw balances, some of them beginning this week, the Herald Sun reported last night.
The changes come as the royal commission declared home loans, car loans and credit cards would be put under the microscope at its first public hearing next month, with the inquiry already uncovering evidence that lenders may have breached the law by failing to treat borrowers “honestly and fairly”.
CBA will now automatically reduce minimum mortgage repayments for customers if their interest rate falls, the newspaper reports. Borrowers who want their repayments to remain at the original level will have to “opt in” by manually increasing their direct debits.
If they do not, they will end up paying more in interest charges and paying off the principal at a slower pace.
And the Herald Sun reports that the bank is changing its formula to calculate the minimum weekly and fortnightly mortgage repayments.
CBA is also restricting the way customers can dip into their redraw accounts, where additional repayments on their loan are held. This includes only allowing customers access to their redraw funds once their full monthly repayments are made on their loans.
A CBA spokeswoman told the Herald Sun charges would provide more “flexibility” to customers.
