Suncorp Bank mortgage customers have been notified that their minimum monthly repayments may rise after their accounts are transferred to ANZ, due to differences in how the two banks calculate minimum repayments on loans where borrowers have made extra payments. Suncorp sent the notification email to affected customers on 13 October, Yahoo Finance and ABC News reported.
The change stems from ANZ's method of calculating minimums on the full outstanding loan balance, while Suncorp calculates them on the net balance after accounting for extra payments. Under Suncorp's approach, a borrower with a $200,000 loan and $100,000 in redraw has minimum repayments calculated on $100,000, but under ANZ's approach the calculation uses the full $200,000. ANZ acquired Suncorp Bank in 2024 and is now moving Suncorp borrowers onto ANZ's loan platforms, a transition that will eventually affect over a million customers.
A worked example from Canstar shows the impact: a borrower carrying $600,000 in debt with 25 years remaining and $100,000 in extra funds faces minimum repayments of $4,047 a month when calculated on the full balance at 6.49%, compared with $3,373 when calculated on the net $500,000 balance. One Suncorp customer who contacted the ABC said the email indicated their repayments could climb by more than $1,000 each month. Suncorp customers will also lose the ability to link multiple offset accounts to their mortgage, as ANZ permits only one offset account, while Suncorp allows several.
Brisbane mortgage broker Jayden Vecchio said that unlike the CBA-Bankwest takeover, where customers remained on the existing brand, Suncorp customers would be fully transitioned to ANZ products. He said ANZ's method results in the loan principal being paid down more quickly with less interest paid overall, but reduces short-term cash flow, which some borrowers rely on during renovations or parental leave.
Canstar director of data insights Sally Tindall said the most common practice among banks was to exclude or discount extra repayments when calculating minimum payments, and that interest is still charged only on the net balance. She said the repayment increase would come as an unwelcome shock to thousands of Suncorp customers discovering the change when they move to ANZ in June next year.
A spokesperson for federal Treasurer Jim Chalmers described the decisions as commercial matters for ANZ but said the government expected the bank to treat customers fairly, warning customers would seek better deals elsewhere if it did not.
Affected customers may see their minimum monthly repayment increase by hundreds of dollars or more than $1,000 in some cases unless they follow Suncorp's guidance. Refinancing with another lender is an option, but may prove difficult for those who have experienced a reduction in household income or for recent borrowers with a high loan-to-value ratio, particularly when house prices are falling.
Reporting: Yahoo Finance, ABC News
Written by Pick & Scroll News from the reporting and documents linked above.
