This month a bank being folded into its parent company stopped accepting new home loan applications, with final approvals closing on 27 October and settlements required by 26 December. Mergers, system migrations and lenders leaving the market all lead to moments like this, and they raise the same questions for existing customers. Your current loan keeps running, but some of the things you might want to do with it may not, and that is worth understanding before you need them.
Your Existing Loan Contract Continues
When a lender stops taking new applications, existing loans are not cancelled or called in. Your loan contract stays in force, including the remaining term, the repayment type and any fixed rate period you have locked in. Repayments continue to come out as normal.
Variable rates remain set by the lender under the terms of your contract, so they can still move up or down in the usual way. Fixed rates are honoured until the fixed term ends.
What You May No Longer Be Able to Do
The practical impact shows up when you want to change something. Any request that needs a new credit assessment can be affected once the lender stops processing applications. That includes increasing the loan or releasing equity, adding a new split, switching to interest-only, adding or removing a borrower, and some product changes.
If you were planning to use your current lender for your next purchase, or to top up your loan for renovations, the lender’s deadlines become important. Applications in progress may need to be approved, documented and settled by specific dates, and anything that cannot meet those dates may need to go to another lender.
What Happens to a Pre-Approval With That Lender?
A pre-approval does not guarantee formal approval, so if the lender closes to new business before you find a property, the pre-approval may lapse. Buyers in this position often move their application to another lender early so the search is not disrupted by a deadline they cannot control.
When the Accounts Actually Move
A change in ownership usually ends with customers being moved onto the new bank’s systems. That can mean new account numbers, a new online banking app, and loans being mapped onto the closest equivalent product the new owner offers. Features such as offset accounts, redraw and fee structures may look different afterwards.
Most migrations come with individual letters and a timeline, and customers are generally not required to act until they receive their own instructions. It is still worth checking how your offset account, direct debits and any linked accounts will be handled, since a broken offset link can quietly increase the interest you pay.
When a Loan Book Is Sold
A related situation is a lender selling its home loan book to another company, which happened this year when a foreign-owned bank agreed to sell its Australian mortgages to a private equity buyer, with a non-bank lender servicing the loans. In a sale like this, your loan contract transfers to the new owner on the same terms. What changes is who manages the account day to day, how you contact them, and over time the rates and products on offer.
Be Alert to Scams During a Changeover
Periods of change attract scammers, because customers expect to receive unfamiliar messages about their accounts. Any email or text asking for login details, card numbers or payment to a new account should be treated with caution. Contacting the bank through the phone number or app you already use, rather than a link in a message, is the safest way to confirm whether a request is genuine.
A Natural Time to Review Your Loan
Existing customers can stay with a lender that has closed to new business. Even so, the change is a sensible prompt to check whether your rate is still competitive. The October rate rise has just flowed through to variable loans across the market, and borrowers who have not reviewed their loan for a while may find a gap between their rate and what other lenders offer new customers.
If you do decide to refinance, the usual steps apply: a new application, a valuation and a serviceability assessment at the new lender. For anyone with plans that need a new approval, such as a top-up or the next purchase, starting that process early avoids being caught by a closing deadline.
Key Takeaways
- When a lender stops taking new applications, existing home loans continue under their current contract terms.
- Requests that need a new credit assessment, such as top-ups, new splits or interest-only switches, can be affected.
- Pre-approvals with a lender that closes to new business may lapse, so buyers often move their application early.
- Migration to a new bank can change account numbers, apps and product features, including offset links.
- When a loan book is sold, the contract transfers on the same terms but the servicer and future product range change.
- A lender changeover is a useful prompt to check whether your rate is still competitive.