Big bank to refund interest charges

By Gerv Tacadena

CBA will offer interest refund for those qualified for mortgage deferral.

The Commonwealth Bank (CBA) announced that it will provide further support to mortgage borrowers who are granted a six-month repayment deferral.

When borrowers are granted a deferral, interest charges are calculated and added to the loan balance, which could result in them paying more each month when the period ends.

Angus Sullivan, CBA's group executive for retail banking services, said the bank will be extending assistance to cover the interest accrued during the six-month repayment deferral.

"To support more Australians, we will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus," Sullivan said.

Sullivan said this means that for an average loan of $350,000, the bank will refund approximately $45 to offset the effect of interest on interest over the six-month period.

"Customer payments will vary based on their loan amount and interest rate," he said.

All four big banks and some non-major banks are offering struggling borrowers with mortgage deferrals of up to six months.

Some lenders also lowered their interest rates in response to the Reserve Bank of Australia's move to cut the official cash rate to a historic-low of 0.25%.

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