Westpac has revealed that approximately 40,000 home loan customers are eligible for a refund, after the bank failed to properly switch interest-only accounts to principal and interest following the expiry of the interest-only term.
As a result of the error, Westpac will refund excess interest already paid by borrowers and provide a lump sum to make up for future interest payments on the principal loan amount that had not been reduced.
In a statement to Mortgage Business, William Ranken, Westpac’s general manager of home ownership, said: “Westpac continually reviews its products and services for customers. As part of this, we identified a mortgage processing error which led to customers continuing to make interest-only repayments on their mortgage instead of being switched to principal and interest repayments at the end of their interest-only period.”
According to Westpac, the remediation process is well underway with more than two-thirds of customers notified.
Affected customers have been told that they’re not required to do anything to receive the refund and will be contacted directly by Westpac.
A support line will be set up for customers who require additional assessments.
The bank first highlighted the issue in December 2017, initially announcing that over 13,000 owner-occupier borrowers were to receive interest refunds totalling $11 million.
This follows news last month that NAB had identified further instances in which it had overcharged home loan customers after failing to properly link offset accounts to broker-originated home loans from between April 2010 and August 2017.
NAB identified an additional 4,930 customers requiring remediation, taking the total to 6,522, with refunds payable totalling over $8 million.
If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.
Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.