Home loans: CBA customers angry over repayment changes
Disgruntled Commonwealth Bank customers are frustrated the bank is automatically reducing their mortgage repayments to the minimum amount from next month without their consent.
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Disgruntled Commonwealth Bank customers are frustrated the bank is automatically reducing their mortgage repayments to the minimum amount from next month without their consent.
The move announced by the nation’s largest financial institution is being done to help release more cash into the pockets of Australians during the COVID-19 pandemic.
The change will occur on May 1 and will reduce repayments for 748,000 eligible variable principal and interest mortgage customers who are paying more than minimum repayments.
It is understood there was pressure by the Federal Government for changes like this to occur in the hope it would free up money for more Australians and encourage spending in a struggling economy.
But angry customers have told News Corp said it would not only lower the amount they pay each month but spread out their loan duration to their full loan term.
In other words they would pay off their loan over the total loan term, say 30 years, and not any earlier.
One customer said his loan term would climb from having just 4 years and 9 months left at his existing repayment level to a whopping 17 years and 6 months once he is reduced to paying the minimum amount.
And another borrower said he was annoyed this change was being made on his behalf without him requesting it.
CBA said they had received 220 complaints from customers about the automatic changes to minimum repayments.
But CBA’s acting executive general manager of homebuyer Jason Chan said for customers who wanted to continue to paying extra they could do this from next month.
“Where customers have their direct debit repayments reduced, they can change their repayments back at any point post this change should they wish to keep their current repayments via NetBank or the CommBank app,” he said.
CBA said the change will release up to $400 per month for customers and generate up to $3.6 billion in additional cash support for the economy.
Mortgage Choice chief executive officer Susan Mitchell said customers who did not want to have their repayments drop to the minimum should “opt out when they can”.
“The bank has made a decision that will ultimately benefit its most vulnerable customers and also serve to stimulate the flow of money, which is important in a slowing economy,” she said.
“In a perfect world, CBA would have given their customers the choice to drop to minimum repayments instead of letting them opt out after the fact.”
CBA has also processed around 70,000 request to defer home loan repayments for up to six months.
The bank has also seen a doubling in the number of accounts reducing repayments to the minimum amount in the last two weeks of March compared to the prior two weeks.