Like many families, Andrew and Belinda Ferguson refinanced their mortgage on their four-bedroom dream home as interest rates plummeted during the pandemic.
But the Brisbane married couple had no idea they’d be charged nearly $20,000 two years later after their bank made a major interest rate error.
Or that they would become embroiled in a months-long “nightmare” battle with their lender to right the wrong – with the bank initially blaming everyone else before offering the family less than $400 as a “gesture of good want to’.
The parents, who have two young children, currently have a home loan worth just over $700,000 with St George Bank.
Mr Ferguson said that in June 2021 they decided to split their loan and fix $500,000 of their mortgage at a rate of 1.88 per cent for three years.
Andrew Ferguson was involved in a ‘nightmare’ battle with the St George bank over a mistake the lender made with its interest rate
St George initially offered the family a paltry $395 as a “goodwill gesture” – despite their mistake potentially costing the Ferguson’s nearly $40,000
Their mortgage broker received an email from St George Bank confirming that the requested change had been made.
“With all banks cutting their interest rates to record lows, it was a good time to review our current situation and I think a lot of people were doing it at the same time,” he said. news.com.au.
“I think you’d be crazy to call the bank and say, put me on variable — a lot of people wanted to fix their rates.”
But the couple were shocked to discover 18 months later that the new interest rate had never been applied.
Instead, they were hammered by rising interest rates as the Reserve Bank of Australia pushed through 10 consecutive hikes in as many months, pushing the cash rate to 3.6 percent.
The couple was charged 6.27 percent on the portion of their $500,000 home loan instead of 1.88 percent.
This means they paid an extra $700 each month than if they had had a much lower rate.
Australians have been spared a rate hike for the first time in a year, but the relief is likely to be short-lived
Mr Ferguson assumed the error could be easily fixed, but St George, which is owned by Westpac, had other ideas.
The lender accused the family’s broker of allegedly not filling out the correct form – even though they received an email confirming the change.
When Mr Ferguson complained to the bank in February, the bank rejected his demand to apply the lower interest rate within two days.
“After talking to the broker and he provided all the written formal evidence I thought this should be a pretty straight forward solution as the bank has it in writing but then they started getting clumsy and got us into a game spin cycle with the customer to bring complaints procedure,’ he said.
“It’s so frustrating and it’s wasted so much time when it’s black and white and should be an easy fix. The more it goes on, the more it gets to me – it makes you look at the bank’s history and look at all the fines Westpac has had to pay over the years.
“I think not too long ago they imposed one of the biggest fines in history for charging people who have died and look at the amount of profit they make and how much of that profit is taken each year from the hollowing out their customers?
“I guess I’m not going to allow them to stand there and brag about their record winnings and be one of the people they erode every year.”
The 3.5 percentage point increases since May 2022 are the heaviest in a short time since the RBA first published a cash target in January 1990
The couple lodged a complaint with the Australian Financial Complaints Authority (AFCA) ombudsman.
Incredibly, St George then blamed the family for not noticing the mistake sooner.
Mr Ferguson said they had a lot going on at the time and it was difficult to work out the loan split.
“In my defense… it’s the same problem if you noticed it on the first day or the last day, what’s the difference?” he said.
In response to the AFCA complaint, St George said they would refund their $395 annual fee as a “goodwill gesture.”
Mr. Ferguson rejected the meager offer, calculating that he would lose nearly $40,000 over the stipulated three-year period.
“That’s just ridiculous, I mean they’re getting to the point where if they were a country they’re like Russia because they don’t have morals,” he said.
But St George Bank has since performed a total ‘backflip’, saying they would honor the ultra-low interest rate originally requested two years ago.
They also refunded the family $17,376 in overpaid interest and offered $2,000 to the couple “for all the frustration this matter has caused.”
Mr Ferguson said he reluctantly accepted the $2,000 but added that the bank only changed its mind when the media held it “responsible”.
“The entire strategy employed by the St. George customer service team was to shift the blame onto me and my mortgage broker,” he said.
“It was crystal clear where the mistake was made on the first day I presented the evidence.
A Westpac spokesperson said they could not comment on individual customer matters for confidentiality reasons.
‘If a customer is concerned about his home loan and a mistake has been made, we make sure that the customer is not left out. We apologize for the inconvenience caused,” the bank said.
Daily Mail Australia contacted Westpac for further comment.