Customers Angry As ME Bank Reduces Amount They Can Withdraw From Home Loans | Banking
ME Bank has cut the amount that about 20,000 customers can withdraw from their home loans by several thousand dollars, sparking outrage from borrowers hoping to use the money during the coronavirus crisis.
A spokesperson for the bank, which is part of an industry super fund group, said it made the move after finding that “the ease of refinancing some legacy home loans could lead some clients to take behind on their original repayment schedules “.
Home loan renewal facilities allow borrowers to make additional mortgage payments and use the money to pay off their loan faster or withdraw money later.
Customers who flooded the bank’s Facebook page with complaints appeared to have been taken by surprise by the move.
“The money we lost is actually my husband’s severance pay because he was fired last week,” a client said in a post on the page last week.
The customer stated that her drawing limit had been reduced by “over $ 16,000”.
“We are not eligible for Centrelink payments and were relying on these funds to help us,” she said.
Another said his limit was reduced by $ 20,000 without notice.
“In fact, no communication at all,” he said.
“Fortunately, I don’t count on this amount for my future purchases, but how would you know? I have been a loyal customer for over 20 years and am well ahead of required payments.
Some clients have said they have filed their grievances with the Australian Financial Complaints Authority. An AFCA spokesperson said the authority could not comment on specific cases.
ME Bank did not respond to questions about when it discovered the problem, when it made the change, or what the typical reduction in the redraw was.
His spokesperson said about 4% of home loan customers were affected by the change. This equates to just over 20,000 loans, based on home loan numbers disclosed in the bank’s latest annual report.
“ME is in the process of contacting affected customers,” the spokesperson said.
“Some customers could run the risk of not meeting their repayment commitments, potentially leaving them exposed to financial hardship at the end of the loan term.
“We look at the personal circumstances of each affected client and are committed to working with them to determine how we can help clients with their individual financial needs.
“For customers whose limits have been reduced, the bank will seek to reorganize funding at the bank’s expense.”
He said troubled home loan customers could request a three or six-month deferral of repayment under the federal government’s coronavirus relief program.