The same old greasy number….

So you all thought that rip-off banks were restricted to the USA and the rest of the world was (relatively) squeaky clean?

Think again.

The ANZ bank in New Zealand recently wrote to mortgage customers who are paying off their loans quickly,  informing them that they’d be cutting the repayment to the minimum unless they heard otherwise “because we’re changing computer systems”

“Reducing your payments means you’ll have more money to use for other things” they wrote.

Paraphrased: We’re unilaterally changing the conditions of contract to extend the lifespan of your mortgage so that we we earn more interest and we’re betting on the fact that lots of you won’t notice”

Interest.co.nz, a leading New Zealand financial website, picked up the story and even featured my letter to ANZ’s COO as their Comment of the Day.

Wow. Talk about 15 minutes of fame.

I wrote:

Please help me understand how “changing computer systems” has generated
self-written letters to mortgage holders without human intervention.

The response was as vacuous and weasel-wordy as you’d expect:

“I can confirm that ANZ is moving to The National Bank’s
technology platform later in the year.

This means there will be some changes to products for ANZ customers, and
ANZ customers will also gain access to new products.

Our approach is always to inform those customers first via a letter and
then to speak directly with them to help them through any changes.

There are options for customers that give them the same banking outcomes
as they currently have.  For example, if customers want to keep their
repayment amounts the same as they are now, all they need to do is
contact us to confirm this.”

What’s paradoxical, of course, is the fact that ANZ’s National Bank subsidiary (my bank..) pushes a Flexible Home Loan product (graphic) that allows people to pay off their mortgage early and save on interest payments.

In the case of a customer with $150,000 over 25 years at 6%, paying $400 on top of a $1360 minimum payment means that you’ve paid off your mortgage 12 years early and saved yourself $72,000 interest.

Which is exactly what the ANZ doesn’t want you to do.

Reduces executive bonuses, you see….

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