Australia’s largest bank will make payments to home loan customers impacted by coronavirus to offset interest charges.
The Commonwealth Bank (CBA.AX) will make the payments to customers who have taken up a six month repayment deferral, in a bid to offset the overall interest charged on the loan.
“When a home loan repayment is deferred for six months, interest is calculated and added to the loan balance each month which can result in customers paying interest on interest each month,” group executive retail banking services Angus Sullivan said.
“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.”
For an average loan of $350,000, the bank will refund around $45 to offset the interest accrued over the six month period.
“Customer payments will vary based on their loan amount and interest rate.”
The four major banks in March announced they would allow home loan customers to defer mortgage repayments for six months as part of a $100 billion scheme with the Reserve Bank of Australia to alleviate stress on Australian households, as thousands are tipped into unemployment.
And the government recently announced landlords would not be able to evict tenants based on financial difficulty for the next six months. Landlords claim the ban on evictions places them at a financial disadvantage, due to the accruing interest on their mortgages.
CBA recently cut its fixed rate home loans by 70 basis points for those with one, two and three year fixed terms to a record low of 2.29 per cent after the Reserve Bank of Australia cut the official rate to its lowest ever.
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