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Major bank offers mortgagors new repayment management tool

by reporter5 minute read

Home loan customers using the big four bank’s app will be able to align their home loan repayments with salary payments to better manage cash flow.

The Commonwealth Bank of Australia (CBA) has announced the launch of a new feature in the CommBank app that enables home loan customers to personalise and align their mortgage repayments with the date and frequency of their regular incoming salary payments.

The move comes after the bank found that while 80 per cent of its customers were paid weekly or fortnightly in 2021, the majority of home loan customers had monthly repayments.

A collaboration between the bank’s behavioural science and financial wellbeing teams and Harvard University’s STAR (Sustainability, Transparency, and Accountability Research) Lab therefore sought to explore how the timing of large expenses relative to income could improve a person’s cash flow and make it easier to achieve better financial outcomes.

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“People’s financial lives have so many moving parts,” said John Beshears, a professor at Harvard Business School and a member of the STAR Lab.

“Income arrives on one schedule, and each major recurring expense, such as a home loan payment, often arrives on its own separate schedule. 

“When these schedules are out of sync, many customers have difficulty planning their spending. Luckily, there are ways to help customers avoid this source of stress.”

CBA’s executive general manager for home buying, Dr Michael Baumann, commented: “For many customers, home loan repayments are their biggest regular expense and traditionally repayments are monthly with the repayment date determined by the settlement date of a property.

“The new feature in the CommBank app is designed to give customers control to be able to align their home loan repayments to when and how often they are paid. 

“Emerging research suggests seemingly small changes like aligning a customers’ repayment day with their pay day can make it easier for them to manage their finances.”

Dr Baumann added that the new tool also “provides customers with another option to filling out a form or having to speak to their CommBank lender or broker”.

“It adds to our growing suite of powerful digital tools that provide unparalleled support and empower customers to self-serve throughout the entire home buying and ownership journey,” Dr Baumann said.

The major bank has been increasingly rolling out features that enable borrowers to manage their home-buying journey themselves.

CBA recently rolled out a Home Buying Hub in the CommBank app that guides new customers through the home-buying journey with checklists and prompts, to help them prepare for their property purchase.

The bank has expressed that it aims to make it easier for customers to self-manage their loans digitally (for example, splitting and switching to managing offset and repayments) should they so wish.

[Related: CBA unveils increase in broker-written loans] 

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