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Banks plan to hike interest rates for COVID-impacted customers

Three of the country’s largest banks have conceded that they will increase interest rates for those financially distressed customers planning to make interest-only repayments after the mortgage holiday period ends.

NAB, Commonwealth and Westpac have admitted that rates will be higher for those customers only paying interest on their home loans, as opposed to those who pay principal plus interest.

Sally Tindall, research director at consumer advocacy organisation RateCity believes the opposite should be true.

“The banks have been told by ASIC to be fair and flexible in their negotiations, and to help people stay in their home, if it’s in their best interests,” Ms Tindall said.

“Yet some banks are planning on charging COVID-affected customers a higher rate if they switch to interest-only repayments.

“These customers should be getting a rate cut, not a rate hike. Asking people to pay more interest when they are in financial distress doesn’t seem fair or reasonable.

“Some of these people, through no fault of their own, have had their livelihood striped from them. They don’t know when they’ll be back on their feet again and they are stressed and scared.

“They need genuine help from the banks, not a bigger interest bill.

“When your bank calls, ask them for a rate cut to help relieve the pressure. They’ve said they are here to help – hold them to it,” she said.

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