Following regulator crackdowns, ANZ bins 'Breakfree' mortgages

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on February 14, 2022 Fact Checked
Following regulator crackdowns, ANZ bins 'Breakfree' mortgages

ANZ is overhauling its mortgage products, including removing Breakfree packaged home loans from the market.

From March, ANZ will dump the packaged home loans and instead offer three product lines for borrowers to choose from: Standard Variable, Fixed, and 'Simplicity Plus'.

The Breakfree package offered customers a discounted interest rate for a $395 annual fee and the ability to bundle a home loan with products such as a credit card or offset account.

Existing ANZ Breakfree package customers will retain their current interest rate discounts before converting to another product in September.

ANZ Group Executive Australia Retail and Corporate Mark Hand said the new approach taken provides customers with more choice while retaining a discounted interest rate and no annual package fee.

"This is really good news for home loan customers who only want to pay for the products and features they value and choose to use," Mr Hand said.

The Breakfree package has been on offer since 2003.

CBA, Westpac, and NAB continue to offer packaged home loan product lines, labelled 'Wealth', 'Premier Advantage', and 'Choice' respectively.


As the final nail in the Royal Commission coffin, in December the Australian Securities & Investments Commission (ASIC) found ANZ failed to provide certain benefits such as fee waivers or interest rate discounts to more than half a million customers to the value of $200 million.

It found customers on the 'Breakfree' package were most affected.

Under the charge of 'fee for no service', ANZ agreed to a penalty of $25 million.

ASIC Deputy Chair Sarah Court said ANZ’s misconduct was longstanding.

"These customers were entitled to receive the benefits they signed up for and in many instances paid for," Ms Court said.

"This case is yet another example of a widespread system failure by a major bank impacting thousands of customers."

As part of the Royal Commission 'fee for no service' misconduct findings, ANZ has paid or offered nearly $124 million in compensation to more than 40,000 customers.

Other banks in the firing line included AMP, CBA, Macquarie, NAB and Westpac, for a total of $2.9 billion in compensation for nearly 1.3 million customers.

ANZ home loan overhaul

ANZ notes under its new home loan approach, customers will not pay a range of fees including:

  • A loan approval fee
  • Loan administration fees
  • Valuation administration fees
  • Progress payment fees
  • Loan renegotiation fees
  • Guarantor administration fees

ANZ will continue to offer offset accounts for customers at a cost of $10 per month.

"We’ve been speaking to them [borrowers] and they want simple options with a competitive interest rate and that is what we are now providing," Mr Hand said.

ANZ battle for market share

Despite the booming property market and record levels of lending, in 2021 ANZ lost market share to other major banks and challenger brands.

At one stage it was leaking upwards of $1 billion in mortgage customers per month, unable to onboard new customers faster than external refinances and discharges.

Pundits put this down to slow mortgage approval times, sometimes taking in excess of six weeks to green-light new borrowers.

Mr Hand previously said this was a "level we weren’t happy with".

"What we didn’t predict ... was the huge, sustained rise in application volumes in 2021, particularly in the refinance market with customers shifting to take up fixed rates," he said.

"This means we are now handling double the applications we were two years ago."


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Jacob Cocciolone joined the Savings team in 2021 as a Finance Journalist. Driven by a passion for keeping Australians up to date with the latest financial news and trends, his areas of interest include financial technology, investing, property and motoring.

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