Couple struggles with bank over interest rates during challenging building project…

A couple made a complaint against their bank to the Banking Ombudsman after their bank declined their request to fix their interest rate. 

The couple had obtained a $170,000 loan from the bank to install a pool and a modular unit on their property. While the construction was underway, the couple requested their bank to fix the interest rate on their floating rate loan. The couple were concerned about the rising interest rates, construction delays, and the builder going into liquidation. 

The bank declined the request at first but eventually agreed to a fixed rate. However by this time, the interest rates had risen and the couple complained that they missed out on a more favourable rate.

The Ombudsman inspected the couple’s loan agreement for the building project which stated that the bank would fix the interest rate once the couple obtained a code compliance certificate for the work and a completion certificate from a registered valuer. 

The Ombudsman found that the bank acted reasonably to accommodate the couple’s concerns. Once it knew about the builder’s liquidity issues, the bank fixed the rate on the amount the couple had borrowed on the basis the couple complete a loan restructuring application which was a fair and reasonable request. 

The bank also accepted an online valuation of the property and backdated the fixing of the interest rate to just before the code compliance certificate was issued. 

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