So got an email from CBA today stating they will be lowering my home loan repayments to the lowest minimum required. No ifs or buts. Automatically going to happen and cannot stop it. To change it back I have to contact them 5 days after that fact…
Yes I know it's a simple thing to do (I hope it is in my case as it's in a joint name and I don't have contact with the other party), I just find it annoying and frustrating that they are making this choice for me and every other customer.
Sorry can you elaborate a bit more, what is the 4200 and what is the 2000. Are you having fixed rate right now? I am just very curious
You shouldn't have to wait 5 weeks for them to advise you that if you break your current fixed rate there is a break fee applicable which is the fee to come out of the fixed-rate contract. This is all common knowledge.
It would have been ideal that if you have unfortunately been impacted by COVID19 and suffered a job /income loss (which you can provide evidence for), they then offer to move your current fixed-rate mortgage - to the lower fixed rate of 2.19% without charging you a break fee and/OR provide a home loan repayment deferral.
I say this because your comment is not clear if you have directly suffered an income loss due to COVID19. Also, note the bank is not a charity and they are not doing anything illegal or wrong - you agreed to those T & C's when signing up to that fixed-rate ( which would have been the lowest at the time like 2.19% is now - with ANZ), so its at their discretion what they are able to offer
With the numbers you provided you are worse off by $2k if they don't waive the fixed contract break fee, so you don't have any option other than refinancing to another bank with a $4k cashback offer to cover most of your ANZ break fee/moving fee
Thanks for the comments. I'll clarify the situation:
Their March-20 Covid-19 PR spruiked:
Home loan customers
• reduced our two-year fixed rate by 0.49%pa to 2.19% pa for Owner Occupiers paying Principal & Interest on ANZ Breakfree from 23 March 2020; our lowest fixed-rate home loan on record!
• reduced our variable home loan rates by 0.15%pa effective from 27 March 2020
I am aware there are usually break fees involved to change a fixed mortgage, but their optimism indicated this offer was beneficial to those who pay Breakfree fees (which we do). The reality is it's a way to extort more money from those who are vulnerable. They've veiled their greed in a goodwill message, so I am hoping others aren't sucked into this.
I will be doing my best to move to another bank as soon as we finish the term and have income again. Hoping there are banks with some ethics out there.
if you persist enough they should consider moving you from 3.75% to 2.19% ( OR an agreeable lower rate) without any fee's especially since you are clearly able to show how your financial situation has been adversely impacted. You just need to speak to the right team/person who can make that decision. I would go to the local branch and ask to speak to the manager etc if I was you
As far as the ANZ advert is concerned, it's clearly aimed at new clients and clients who are on a variable to ensure they stay with the bank. A simple google search will bring articles to show that ANZ is losing quite a lot of market share of the home lending business as compared to its peers
@Maxdax: I went through their phone team, and after escalation a branch manager called me. They still wouldn't budge, but said they would share my feedback. She was nice, so I didn't share the colourful feedback I felt their policy deserved.
On ANZ market share loss, this interaction justifies their decline. Apart from their workers who will lose their jobs, I don't feel one bit sorry for their management and board who had a chance to do the right thing and have chosen not to.
They have misunderstood their share price is based on revenue and retention, not just margin. Customer churn means losing profits so shareholders don't get dividends and the group declines. Then they will cut expenses by culling more jobs and branches, while seeking more taxpayer funded Gov handouts. Rather than exploiting profits they need to be focused on retention of customers and staff, and building loyalty. In a post-covid recession people will turn to the companies they can trust.
I don't feel their offer was 'clearly aimed at new clients and clients who are on variable' but can accept that's how you interpreted their campaign. I'm an existing fixed mortgage customer and was targeted by their campaign mailouts, but would have been much happier to be excluded as you suggested instead of targeted with a new rip-off scheme
I agree refinancing with fee cover you suggested is a good option, but is unachievable until we have income stability to satisfy a new banks finance approval.
@TheLurker: I would drop them a line here as well if you haven’t already. It’s normally very quick and you get referred to people who have a lot more delegation - see link
https://www.anz.com.au/personal/contact-us/feedback/
All the best!
@Maxdax: I haven't done that, so appreciate the tip. Will update if anything valuable comes up. Thanks!
…
Have done so, but on reflection I don't think I can trust them again. I sent feedback to explain why I'll be leaving. Probably unlikely to ever reach a decision maker, but at least it's a chance to share my perspective on their choices
Generally break fees get capitalised into the loan, so it might be better from a cash flow perspective to break and get onto the lower rate to reduce your payments.
While I am not an expert, paying interest on another 4 odd grand for the next few decades probably doesn't stack up to a saving.
I'm not desperate enough to scupper our future, and can't see RBA holding interest as it is in the coming year despite having only one more round left in the chamber. I've learned my lesson on fixing interest rates and providers. Appreciate the reply and idea though
The RBA has only 25bps to wiggle. The reason that suddenly all these big banks released attractive 1-3 years fixed is because the RBA just give really cheap loan at 0.25% to ADI for the next 3 years. So instead of going to wholesale debt market, they just get really cheap money. I am usually doing variable rate, just because of the flexibility, however, i am really considering @2.19%.
@od810: I jumped on what looked like a great deal on interest last year, not expecting another 1.5% drop over the past 14 months. Given the IMF prediction of 100x bigger impact than GFC I reckon fixing now could be a mistake. Seeing how much ANZ and others are pushing it, their analysts are probably banking on it
This is why an offset account is good. You don't need to worry about this crap. And during this kind of environment, i would take all the money out of redraw. The bank can flip and make your redraw inaccessible like they did in the GFC.
I know some people want it simple like pay off the debt asap. But it is not necessarily a good option. Always have cash reserve for time like this (and redraw is not cash reserve)
stupid question: do the banks make less money from the mortgage when they RBA rate is low? Don't the banks apply a margin on top of that rate, so if RBA rate is high, the bank also has to to pay more, and therefore they don't necessarily make more money than if the rate is high?
I haven't seen bank profits drop as the interest rates drop .. check their annual reports.
The general consensus is that when RBA lower the cash rate, the banks loan margin tend suffer. However, it doesn't translate to profit decline or anything because when the rate is lower, people tend to borrow more. RBA cash rate is only a guidance, the main drive of home loan rate is the wholesale debt market.
wow … guess it helps the CBA make more profit with customers paying extra interest .. seems super dodgy to me .. surprised it is not illegal. ACCC should investigate.
This doesn't really impact anyone with an offset account though. I mean monetarily… You can resume your extra payments at any time with no additional interest paid..
Never heard of an offset account OP?
No…please explain…
/MASSIVEEYEROLL
This reduction will help more people than it harms in this current climate. Banks cannot handle the load of callers seeking for help.
It's not hard to just voluntarily increase repayment, I'm sure people who have voluntarily upped their repayments are financially savvy and actually paying attention to their mortgage.
And for the 90% of mortgages with offset, this makes no difference.
Go find something better to waste your time crying about. People are waiting days to get in contact with bank, this issue is going to take you 2 minutes to fix online.
It's also not hard to reduce repayments…..
Go find something better for yourself to do, then show boating like you're the only person who knows about offset accounts.
The main point of this post was to inform those who may be affected by this and not have noticed the communication.
@Danstar: "The main point of this post was to inform those who may be affected by this and not have noticed the communication."
No it's not, it just comes off as a whinge post crying over for literally nothing. It's not a big deal.
People are struggling and begging to the banks for help and they are completely overloaded. Yet here you are whingeing about not being able to give banks more money, it literally takes 2 minutes to fix it.
While I do agree with your point too, however a simple opt-out option would've been good - instead they make it harder for you by asking you to "remember to do this after May 6" which is such an obvious dick move hoping people forget to do so. They get a few cents from you before you change it back, but multiply that over millions of mortgages and that means free money for CBA. As people have said, they're not our friends but hey I'm still gonna rant about it how they suck haha. :)
Step 1: Increase your payment to a higher amount than what they were to begin with.
Step 2: Profit from their shenanigans.
Open an offset account and offset it against the loan. Keep transferring any surplus cash into that account. You won't get charged interest to that amount in the Offset account.
CBA CBS
same across ANZ - just received a letter from them.
The same CBA that I had a savings account with that I forgot about. The account ended up being in arrears from account keeping fees, they never closed the account when the balance went to zero from decay.
https://www.choice.com.au/rankthebanks
"Commonwealth Bank also failed in the CHOICE COVID Fairness Scorecard," he says. "In particular, its decision to switch all mortgage customers to minimum repayments without their consent deserves to be called out. This careless decision means many people, irrespective of whether they are in hardship, will pay more interest over a longer time. Customers should have been given a choice."
i can see there was some real panic stations from the government and banks in march…it's not over yet
Whenever they lower interest they lower the min repayment but I never change my actual monthly repayment, have not changed for 10 years, don’t think this would make a difference for those who never checks, and those who does, they can call up
This comment doesn't help you OP but I need to vent…
ANZ made a song and dance about dropping interest rates for fixed mortgages to 2.19% for covid. After 5 weeks they called me back today.
Those slimy greedy MFing scumbags will honour the offer, but will charge nearly $4200 as a fixed break fee (even though we pay for BreakFree as per their criteria).
Accepting their "help" will charge us around $2000 MORE than battling through this ourselves.
I hope their entire board of profiteering money hungry soulless filthy arseholes are first in line for the next incurable disease. I know this is a post about CBA, but after today ANZ can eat a dick!