Banks Won’t Lower Repayments Unless Customers Act

Homeowners expecting lower loan repayments after the recent interest rate cut will need to contact their bank to see a reduction. Three major banks have lowered their variable home loan rates but aren't automatically adjusting monthly repayments, meaning customers must request the change if they want immediate relief.

Currently, National Australia Bank, Commonwealth Bank, and ANZ have passed the cash rate cut onto borrowers by reducing interest charges. However, their default approach keeps repayment amounts unchanged unless customers actively apply for an adjustment. This leaves many continuing to pay the same amount, which could help them pay off their loans faster but won’t free up additional cash in the short term.

Westpac is taking a different approach by automatically lowering monthly direct debit repayments for those paying the minimum required amount. Customers with higher voluntary repayments, however, will not see changes unless they request it. This difference in bank policies has frustrated some borrowers, especially since repayment amounts often increase automatically when interest rates rise.

The impact on household budgets will vary. While maintaining higher repayments helps customers reduce debt faster, those struggling with living costs may find it inconvenient to manually request lower repayments. With call centres experiencing high demand, banks say they offer digital options for making the change, but the lack of consistency has raised concerns about financial clarity for borrowers.

Source: Australian Financial Review, The Adviser, 7 News