NAB undercharges UK home loan customers

Friday 23 July 2010

Article by Mozo

An administrative blunder has seen National Australia Bank undercharge its 18,000 English and Scottish borrowers $32.8 million in interest on their home loans over the past four years.

The underpayments were identified by NAB’s Clydesdale and Yorkshire subsidiary earlier this year after it was discovered that the bank’s UK operations had been using the wrong formula to calculate borrowers’ interest charges.

It means NAB has been forced to take the embarrassing step of writing to variable rate mortgage customers to tell them their loan repayments are about to increase by as much as £300 ($520) a month to recoup the unpaid interest.

Issuing an apology, Clydesdale and Yorkshire said: "The banks are very sorry that this error has happened and for the inconvenience that this may have caused.

"The calculation has been corrected and the banks have written to affected customers to apologise and suggest ways to return their accounts to the positions they would have been in had this not occurred."

Such news may interest Aussies looking to compare home loans in search of the best interest rates. It comes after a study of 20 countries by the Economist magazine recently concluded that Australian property is the most overvalued in the world.

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