CommBank technology to help customers better manage home loan repayments

If you’ve ever felt the frustration of your income payments not matching the frequency of your bill payments, then the newest feature from Commonwealth Bank’s CommBank app may be for you.

In 2021, around 15% of CommBank customers receiving a regular salary were recorded as being paid monthly. The majority of payments were fortnightly (70%), with weekly also at 15%

The new feature aims to align customer home loan repayments with their regular incoming salary payments.

Eligible customers can access the new feature via the CommBank app: Home Loan Account > Manage Loan > Repayments > Change Amount or Frequency.

The advantages of flexible repayments

This innovative new feature comes from a collaboration with Harvard University’s STAR Lab, which explores the impact of the timing of large expenses relative to customer income, and how to better improve cash flow to achieve greater financial outcomes.

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

Typically, a home loan’s repayment frequency may be decided on at settlement. However, if your financial circumstances changed and the frequency no longer suited your income timing, it may be worth considering taking advantage of this feature to reduce the risk of financial stress.

CBA’s Executive General Manager for Home Buying, Dr Michael Baumann, said: “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,” he said.

Innovative features and fintech are often offered first by competitor lenders to the big four banks, such as online lenders and neobanks. This is because they typically have less red tape and fewer overheads that may get in the way of pushing forward new ideas.

This new offering from Australia’s biggest bank may come to the relief of their home loan customers struggling with managing the timing of their income to their expenses.

While there is more to a home loan than the features offered, it’s worth considering factoring in what innovation or fintech a lender provides when choosing your first or next home loan.

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