Standard Bank has increased its administration fees on home loan accounts by 305% to recover part of the costs of maintaining these accounts, the bank said on Thursday.
The fee goes up to R22,80 from R5,63 for bonds of more than R500 000, a statement from the bank said.
The bank currently incurred costs of more than R100 to maintain each account, which includes the production and distribution of statements, interest-rate change letters, life-assurance debit order and policy processing, and security document maintenance and storage.
The Usury Act prevents applying the increase to bonds below that level, spokesperson Erik Larsen said.
”That is huge. It is really in a major way problematic. I wonder if the bank ever listens to what [South African Reserve Bank Governor] Tito Mboweni has been saying,” economist Mike Schussler said, referring to Mboweni’s inflation targeting.
Mboweni has since 2000 been trying to keep consumer inflation within the 3% to 6% range. Year-on-year consumer inflation less mortgage costs (CPIX) for the historical metropolitan and other urban areas came in at 3,1% in February — down from 3,6% in January.
Schussler said he can see the need for an administration fee but was surprised that a bank, which would be one of the biggest benefactors of lower interest rates, imposed an above-inflation increase.
Keith McIvor, Absa’s general manager for group products and pricing, said the group has decided to keep its administration fee at the government-regulated R5,70 from April 1 for all bond account holders, regardless of amount, until at least the end of the current financial year.
June Tudhope, MD of Nedbank home loans, said: ”The monthly administration fee on Nedbank home loans is currently set at R5,70 irrespective of the loan amount. In preparation of the bank’s annual pricing review, to be announced on July 1, we don’t anticipate any increases in this fee.” — Sapa