Mortgage break fees have been in the news. The main banks use different methods to calculate the break fee, but Kiwibank differed from the other banks in that it had the option of using two methods.
It could base the break fee on either changes in retail mortgage rates or changes in wholesale rates. It then charged the higher of the two methods. We thought this wasn't fair to customers and raised it with Kiwibank in December.
Following our discussion and complaints from customers, Kiwibank changed its break-fee formula in December. It removed the option to base the fee on mortgage rates. Kiwibank's Home Loan Terms and Conditions will be updated to reflect the change by 1 February.
A spokesperson from Kiwibank told us that the bank had only ever used wholesale rates to calculate its break fee so the change in the formula didn't affect borrowers who may have already repaid their fixed-rate loans early.
More information
- Mortgage break fees - our report into some of the myths of break fees
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