Bill to quit mortgage appealed

Stop whinging!! I'm fixed for 3 years, live with it. If the rates were rising you wouldn't be complaining about break fees. Get over it. Aussies' full of whingers, maybe you belong there.

You can say that people are responsible for the decisions they make, Jamie, but no one predicted the severity of the present credit crisis. The OCR cuts at present are unprecedented. Panic doesn't follow any recent trends and so you can't make comments such as "It's not rocket science" and "live with it". Lets see how you, tsk, live with the idea that Westpac is taking 8.99% off you when they will soon be lending at 6%! Who is going to cover YOUR lost cost!!

No one predicted this, and in these tough times, it is the mums and dads again who get shafted. Westpac should absolutely negotiate on their ridiculous breaking fees in times such as these. If you are lucky enough to have a job at the moment, buying a loaf of bread is a mission if you have to pay 8.99% to the bank - get real, everyone needs a break in today's financial nightmare.

Could you please stop saying 'at the end of the day" please?

The only reason they took a 5 year rate was because at the time they fixed in it was 'the cheapest rate' for an extra 20 base points or so they could have got a shorter term and less fee's. The bank should not be picking up the tab in their lack of due diligence. I suppose they will want the Reserve Bank to bail them out and Westpac to pay for their air fares to Australia too!!??

As A Banker pointed out, this is not a fee as post #71 appears to state. This is the true economic cost of the bank borrowing the funds off the overseas investor and not being able to lend it out, at or above the rate agreed. If you lent 10k at 10% for 1 year, and 6 months into the contract, I decided to repay all principal owing, plus interest to date, you would miss out on 6 months of interest. That's OK until you've actually borrowed the money from someone else to lend to me, and you've had to pay 9% for this money. Suddenly you're missing out on you 1% interest, plus you still have the pay the 9% to the person you borrowed it off. Therefore, would you not seek to get the funds from me, the person who broke the contact? Some banks, including westpac, do ad an admin fee onto the early repayment charge, but this will be making up a very small percentage of the total cost - probably around 2% ($300). If interest rates had not of fallen in the past few months, and we weren't going through this 'global meltdown' then these people would not be faced with this cost, neither would the bank (as pointed out by post 69). There is no lack of transparency - ask any banker to explain to you how much it could cost you, and they will tell you, even before we were in an dropping interest rate environment, bankers were able to work this out by referring to the tables stated below. Further to this, if you read your facility master agreement (FMA) as you should, it clearly states in there how the cost is calculated and even gives an approximate cost per $1,000 repaid. Eg, if interest rates drop 1%, the cost will be $10 per $1,000 repaid. Have a loan of $100,000? Multiply $10 by 100 ($100,000/1,000) = $1,000. I do not work for westpac, however I feel that the amount of negative attention they are receiving from this attempt to get the country on these people's side, is very unfair. Banks, like every other company have business plans, targets to meet & shareholders to please. If a cost is brought upon them by someone else, then that person/people should cover it.

I hear what you are all saying, but at the end of the day the banks have made huge profits year after year. One must investigate the plight of this family and many more. I myself am locked in a three year mortgage at a very high rate the bank more or less convinced me to sign up for three years. At the end of the day I can't afford this high rate. The penalty for ending this fixed term would cost me over $1000 more than any gain that I would make moving to another bank/rate. Further the bank now says that I would incur a fee on an amount that ends in less than six months (which they told me there was no fee for ending that fixed term portion only two weeks ago). I understand from the Banking Ombudsman that there is a formula that banks follow when calculating early termination of a fixed loan. This information should be on the banks web site. At the end of the day, in this climate we are faced by unique circumstances. Many families facing defaulting on loans ??? surely the banks need to negotiate a fair and transparent cost for ending a fixed term mortgage.

Re: Comment #71 Are you aware that this amount is determined by the actual cost to the bank to let you break the rate early (aswell as a small admin fee normally). The bank will lend you money at an agreed rate. We borrow this money from overseas markets and agree a rate for that. When a customer decides to break this rate, the bank still has to repay their original loan at the original rate. If this is going to cause a loss to the bank the cost is passed to the customer who as most people have already stated, has signed a contract. Its normally disclosed on home loan agreements/ terms and conditions and also most banks websites will allow you to read more about this.

I am amazed by the number of comments supporting the banks actions. Not because I believe theya re 'the baddies' I agree that when you berak a contract there will be a penalty, but the ammountin the article and others like it are ridiculous. New Zealanders seem to have a very complacent attitude to bank charges, which is probably why you pay so many of them. In other countries the same international banks that are operating in NZ would not dream of attempting to impose such high charges, and if they did, the customers would most likely be eligible to claim them back as they have been in the UK recently. Ultimately it is not the penalty that is the issue of this and many other families, it is the high price of the penalty. Like if you got caught speeding and they shot you for it??!!! It is illegal to speed, but you don't expect a life sentence do you?? Come on kiwis, the banks are overcharging on a daily basis, charges they don't charge their customers in other countries in the world, your acceptance of this, without question is wrong. Good on this family for taking a stand.

They fixed for five years on the sad side of the housing correction, with interest rates already beginning to slide. Which fool was their advisor?

You guys need to read the article. Quote: "A Westpac spokesman said bank charges for the early termination of fixed-rate mortgages were higher as a result of the global financial meltdown and credit crunch" ......... what I get from this is the exit figure would be different if the credit crunch wasnt in full swing. Why should these people pay a higher exit fee at this point in time purely for this reason. It is the greed of the banks and finance industry that has got the world into this situation to start with.