He said the fact the bank would not be accepting further applications for fixed rate loans beyond September 2023 meant he would face much higher lending costs in future. He was also concerned about the drop in value of his property since he bought it, as well as the high loan-to-value ratio of his lending. He said the high ratio would make it extremely difficult for him to refinance elsewhere, and he would be stuck with the high repayments of a floating interest rate loan after his fixed rate term expired in January 2024.

Our investigation

As part of its announcement, the bank said it would honour all existing contractual commitments to customers. This did not, however, mean it had to accept any future applications from customers, including from Galen, for periods of fixed interest rates. The bank has an obligation under the Code of Banking Practice to treat customers fairly and reasonably. What is fair and reasonable depends on the circumstances of each case, and we expect banks to take into account the particular circumstances of each customer. We were satisfied at the time Galen complained to us that the bank had met this obligation because Galen’s fixed interest rate period had not yet expired, and the bank had not yet decided what support, if any, it would offer Galen if he was unable to refinance his lending when the term of the loan expired. It had committed to reviewing his circumstances a month before the term expired.

Outcome

We did not uphold Galen’s complaint.