Suncorp borrower's mortgage payments could spike amid transfer to ANZ

In short:

Suncorp mortgage customers have been warned their repayments could increase by upwards of $1,000 a month when transferred to ANZ.

Suncorp was bought by ANZ in 2024 after the ACCC initially rejected the acquisition.

Consumer advocates say the way that Suncorp and ANZ are treating people shows how little power borrowers have in Australia.

Suncorp mortgage customers received an alarming email last week advising them that their monthly mortgage repayments could rise by hundreds of dollars.

ANZ Bank bought Suncorp in 2024 and is now logistically transferring hundreds of thousands of borrowers off Suncorp's books and onto the ANZ loan platforms.

The email sent by Suncorp to Suncorp customers on October 13 said: "If you've made advance payments and have funds available in your Cashback/redraw, your minimum loan repayment at ANZ is likely to increase."

One Suncorp customer who contacted the ABC said Suncorp's email indicated home loan repayments could rise by more than $1,000.

Suncorp had previously allowed customers with redraw and cashback facilities to reduce their minimum monthly repayments.

ANZ does not have this policy, so some customers are being warned their minimum repayments will increase if they do nothing.

"This increase could be significant depending on the loan balance, how much is paid in advance and the remaining loan term," Suncorp's email said.

Consumer advocates say the way that Suncorp and ANZ are treating people shows how little power borrowers have in Australia.

"Australians deserve better protections in the mortgage market to give them more certainty about what they will pay and the conditions for their loan," Consumer Policy Research Centre CEO Erin Turner said.

'Unwelcome shock'

The director of data insights at interest rate comparison site Canstar, Sally Tindall, said thousands of Suncorp customers were likely to be in for an "unwelcome shock" when they find out their minimum repayments are set to rise as a result of the changeover to ANZ in June next year.

Suncorp told the ABC its customers could avoid any increase in their home loan repayments.

"For most customers there will be no change to their repayments," Suncorp Bank CEO Malcolm Stedman said.

"Those customers ahead on their repayments may see an increase in their minimum repayments, if they choose to take no action."

Ms Tindall agreed with Mr Stedman's claim if customers followed Suncorp's email instructions.

"This is because Suncorp views extra repayments differently to ANZ when they go to calculate a customer's minimum monthly repayments," she said.

The most common practice across the banks, Ms Tindall said, was to exclude or discount any extra home loan payments made, or available cash, when calculating a person's minimum monthly repayments.

For example, if someone has a $600,000 debt owing on their mortgage, and 25 years remaining, but they have $100,000 in extra sitting in the loan, the bank will calculate the minimum repayment amount on the $600,000 debt owing (they will still, however, only charge you interest on the $500,000).

On the average owner-occupier variable rate of 6.49 per cent, the monthly repayments would be $4,047.

However, Ms Tindall said some banks approached this calculation differently by including the extra repayments a customer has added to their loan.

Using the same example as above, the bank calculates how much you need to repay the $500,000 owing over the 25 years remaining.

In this scenario, the person's minimum repayments would be $3,373.

"Most Australians have a home loan that is "variable at the bank's discretion" where the bank can hike fees or change conditions when it suits them," Ms Turner said.

"This means that most borrowers have little control about how much they are paying for their home.

Banks expected to treat customers fairly

The ANZ Bank's acquisition of Suncorp was originally rejected by the Australian Competition and Consumer Commission (ACCC) on the grounds a resulting lack of competition would disadvantage consumers.

"We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland," ACCC deputy chair Mick Keogh said in August 2023.

"These banking markets are critical for many home owners and for Queensland businesses and farmers in particular.

"Competition being lessened in these markets will lead to customers getting a worse deal."

The Australian Competition Tribunal later set aside the ACCC's decision, leading to the banking acquisition then being approved by both the Queensland and federal governments.

The ABC asked the Queensland Treasury to respond to Suncorp's email to customers asking them to adjust their mortgage repayments to avoid higher costs.

Treasurer David Janetzki told the ABC: "This deal was agreed to by the former Labor government and it is up to former Treasurer Cameron Dick to explain why these protections weren't included in the arrangement."

The ABC has contacted the Queensland deputy opposition leader.

A spokesperson for the Federal Treasurer Jim Chalmers said: "While these are commercial decisions for ANZ we expect the bank to treat its customers fairly and with respect, otherwise they'll look for better deals from others."