ANZ has announced its plans to scrap a package loan with over 350,000 existing customers under its belt.
The ANZ Breakfree package provides variable rate customers with an offset account and a free credit card in exchange for an annual fee of $395 and a higher interest rate than its basic loan.
Mark Hand, group executive for Australia retail and corporate at ANZ, said they have found a solution to restructure the home loan while retaining the discounted interest rate and removing the annual package fees that often include loan approval fees and loan administration fees, among others.
“This is really good news for our home loan customers who only want to pay for the products and features they value and choose to use,” Hand said. “We’ve been speaking to them and they want simple options with a competitive interest rate and that is what we are now providing.”
Starting from March, ANZ will offer three simplified home loan products for customers to choose from: ANZ Standard Variable, ANZ Fixed, and ANZ Simplicity Plus. All will have no ongoing fees.
Customers who wish to keep an offset account can do so for $10 a month, while those who want a credit card have to apply for one separately. Meanwhile, existing Breakfree package customers will retain their current interest rate discounts when converted to the simplified home loan proposition in September.
Sally Tindall, research director at RateCity.com, said customers should be aware of their options and decide what to do before the bank even contacts them.
“Customers shouldn’t automatically assume they’ll be ahead under this new structure. People who want to keep their offset account and their credit card could end up paying more in fees if they’re not careful,” Tindall said. “While fees can start to add up over the life of a 30-year loan, they shouldn’t be looked at in isolation. Having a lower interest-rate usually plays a more significant role in the overall equation, especially on larger loans.”
