CBA move that has outraged customers
Thousands of Commonwealth Bank customers have voiced their anger at having their mortgage repayments automatically dropped to the minimum amount from Friday.
More than 3300 complaints were lodged with CBA prior to it switching 748,000 eligible variable principal and interest rate customers onto the minimum amounts without their consent.
The forced move could result in customers taking years longer to pay off their loans and spend thousands more on interest repayments because they have stopped paying extra each month.
A CBA spokesman said the one-off change to migrate hundreds of thousands of customers had been rolled out as part of a series of measures to help support borrowers struggling financially during the COVID-19 pandemic.
He said the nation's biggest bank had been contacted by hundreds of thousands of customers seeking help and financial relief during this period.
"We do understand that this decision does not suit all of our customers and appreciate that we may have caused some of them an inconvenience," the spokesman said.
And he said the change would put hundreds extra back into borrowers' pockets.
"This is worth on average $400 per month for customers," he said.
Using the CBA mortgage calculator for a customer with a 25-year $300,000 loan with 15 years to go on a variable rate of 3.85 per cent, if they were paying an extra $400 per month they would save $20,000 and pay off their loan 2 years and 10 months earlier.
The spokesman said customers from Friday will be informed of the change and if they wish to switch back to paying extra they could do so via online banking or in their app after their repayments have been automatically lowered.
Home Loan Experts' managing director Otto Dargan said the big bank's decision was done without getting the green light from customers and could leave customers worse off.
"Borrowers have not consented and many are not aware that they'll end up paying so much more in interest," he said.
"Extra repayments are essential if you want to cut the cost of your home loan."
When there is a variable rate cut rival big banks National Australia and ANZ do not automatically lower the repayments of customers making the minimum repayments, however Westpac does.
Financial comparison website RateCity spokeswoman Sally Tindall said every dollar counts when it comes to home loans and CBA should have allowed customers to make a choice about lowering their repayments.
"Customers have to 'opt out' of this change rather than 'opt in' which means some people could start paying less on their home loan without properly understanding the long-term implications," he said.
"It's important CBA customers are aware how this change will affect their finances not just next month but over the longer term."
All impacted CBA customers will be switched over the minimum repayments by next Tuesday and they will see the amended repayments reflected on their next direct debit date.
Originally published as CBA move that has outraged customers