Following regulator crackdowns, ANZ bins 'Breakfree' mortgages
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 | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
