CBA Move To Automatically Change Home Loan Repayment Amounts Dubbed ‘Sneaky’ And ‘Immoral’

Australia's largest bank is taking the unprecedented step of changing mortgage repayments to the minimum amount required in a move it says will free up household spending -- but not all customers are happy.

On Wednesday, the Commonwealth Bank of Australia (CBA) emailed its customers informing them of the change.

"By paying the minimum, you'll have access to extra money should you need it," the email read.

The unprecedented move will be made across all eligible home loans, and will come into effect between May 1-5.

But customers who do not wish to extend the life of their loans have told 10 daily they do not see the move as one that's in the best interest of Australians.

Victorian man George Khreish described the move as "sneaky" and fears it will mean customers will unknowingly pay thousands more in interest and prolong the life of their loans.

"When I read it I thought it was immoral and unethical to be extending someone's mortgage without their knowledge.

Many people don't read emails as they get so many, others would not understand the long term financial impact this will have on them ... rather than educating  their customers how to do it themselves,” he said

Kreish said he is financially and digitally savvy, but knows many older or vulnerable Australians aren't.

It's capitalising on a bad situation in society to try and money grab, at a time when many people won't be informed enough to see what the bank is doing.

CBA denies the move was made to line its own pockets, insisting it will free up much-needed cash for customers hard-hit by coronavirus measures -- and those who wish to pay more than the minimum will still be allowed to do so.

The bank told 10 daily the measures will release up to $400 per month for customers by reducing direct-debit repayments to the minimum for more than 740,000 variable rate principal and interest home loan accounts.

This change will not impact a customer's agreed [contracted] loan term if a customer decides to leave their repayments at the minimum.

"We are contacting all customers to clearly explain what this change means to them and how they can continue paying above the minimum should they wish to," the bank said in a statement to 10daily.

CBA says people who want to continue paying more on their loan can opt to change back, but only from May 6 once the blanket changes are in place.

The bank says this can be done online or via the bank's Netbank app, so customers won't have to call the bank, which is experiencing very long wait times.

Another customer told 10 daily she called the bank immediately after receiving the email to complain and got through right away.

"My reaction is that is disgusting. I don't need or want [my loan] reduced and when I called the bank yesterday they said I couldn't opt out over the phone, or just yet. But it is my mortgage," she said.

The woman and her husband are essential workers and are still employed. She said she doesn't believe the "PR spin" that the bank is trying to help Australians.

"I can right now click on to my account via the app and switch to interest-only if I wanted to. It would take a minute -- why do they feel the need to do it for everyone?" she said.

Kreish, who has been a CBA customer and shareholder for more than 20 years, says the bank should not make blanket decisions for its customers.

"If it is really about supporting Australians doing it tough, why not send an email with instructions for how to switch to interest-only on your app. Three clicks and you're done," he told 10 daily.

In March the bank announced deferral options for all customers.

"In response to the coronavirus all our home loan customers can defer their repayments for up to six months should they need to," the bank said at the time.

Since then, CBA has received more than 70,000 applications to defer home loan repayments.

The bank has also reduced its one, two and three-year fixed rates to its lowest ever advertised rate of 2.29 percent.

Contact the author alattouf@networkten.com.au