Changes to St George Portfolio loan

I received a "letter" from St George yesterday, haven't finished reading all of it but one of the points they noted was changes to their portfolio loan that currently they can reduce "portfolio levels on variable primary and sub accounts"......but now they are saying that they can also change levels on FIXED accounts?

huh come again?

So if I have a fixed loan with them to Dec 2020 and I want to "change the rules" and pay out the loan with the view that I'd secure a cheaper fixed loan somewhere else I'd have to pay a break fix fee.

But St George are now saying that they can change their minds on a fixed portfolio loan and call it in.....regardless of how long it is previously fixed for?

Any thoughts?

Surely the banking ombudsman would suggest that if I chose NOT to accept the new T&C's that I can move my banking elsewhere based on their new conditions.

 

The original contract you signed specifically stated that they can change the terms and conditions at their discretion.

 

I have no doubt that I did......

Still doesn't change the fact that technically St George gets to now "default" on their obligations on fixed loans at any time they see fit.

I'd feel more comfortable taking our 3 existing fixed homeloans somewhere else as long as an ombudsman implements that this T&C change is onerous on borrowers and that we should have to pay "break fix payouts" to cancel our existing 5 year fixed portfolio mortgages.

 

Even more concerning is the fine print that now says they can call in any sub portfolio loan at any time. Previously only the head / main portfolio loan could be called in. I called and asked about this but was told they would only do this if I defaulted. Anyone else get this letter ?

 

I'd like to see that in writing.....St George certainly don't indicate it in the letter they sent to us. If defaulting on the loan is the only condition they want to put into the new contract I have no problem with this BUT PUT IT IN WRITING, not leave it open ended like St George have.

Basically there are NO stipulations around how they can ask us to reduce the various portfolio levels.

Like I said I knew they could always do this before and that's the risk you take with a portfolio loan rather than a standard mortgage BUT this change to they can now call in FIXED loans as well is very very concerning.

I know they will probably say.....unless you default it will never never happen however in a bail-in situation like we've seen in Cyprus, Greece, Iceland and Italy.....who is to say Australia wont find itself in similar positions in the next 20-25 years over the life of my mortgage.

Lets face it just this week ANZ found itself under pressure with 18% less profit forcing the sail of its Asian assets.

Personally we've already been affected by a change in St George policies where on a whim they decided no more sub-portfolio loans to expats working overseas which meant we had to move to another bank for our next IP.

With this changing of the rules I'd like to see existing fixed portfolio loan borrowers be able to close down their accounts without any break fees so that I know when "I" commit to a 5 year fixed mortgage the rug cant be pulled out from under me before the 5 years is up.

 

The Portfolio is a LOC. LOC products are generally at call. The lender can demand payment at anytime for any reason by just giving a few weeks notice.

St G is unusual in that they allow sub-accounts. But all of these would be under the same terms so the sub-accounts The sub-accounts could therefore be called in at any stage.

They are also more unusual by offering fixed terms on their subaccounts. This is unusual and if you were going to fix it would be best not to fix a sub-account but just set up a separate split and use a term loan.

As the fixed loan subaccount is a LOC it would be under the same terms. At call. This would be the case even during a fixed term.

They can call the loan in any time and can do so without default. They could call in a loan if they have suspicions you are in trouble for example.

A LOC should never be used for the main loan. You should only use a LOC to access equity and once the equity is used you should covert the loan to a term IO loan.

I would suggest anyone with a LOC try to change it to a term loan asap.

 

Don't worry about it is my advice.Enough people with St George have this product so that any mass call in of these facilities is extremely unlikely.

If it ever got to that stage it would be the whole Westpac group going under and who is to say home loans with redraw / money in offsets wouldn't be similarly affected.

 

LOC's are at call products which is why I generally don't like using them as a facility for anyone on a long term basis - during the GFC there were cases where people got into strife with their LOC's being cancelled during purchases/funding their business accounts.

 

If you have any business banking then yes LOC not a good idea. Then again not a bad idea to have your business banking and personal banking separate.