Distressed borrowers can have their mortgage repayments paused
Borrowers and small businesses customers have been given financial relief including the pausing of their home loan repayments and interest charges.
Business
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The nation’s biggest banks will give mortgage-free holidays to customers, in an unprecedented move prompted by the coronavirus pandemic.
ANZ boss Shayne Elliott said anyone who asked for help would get it — the bank would not “grill” customers or even ask them for paperwork if they requested repayment relief.
ANZ was yesterday the only of the big four lenders to pass on discounts to variable rates to borrowers, following the Reserve Bank of Australia’s decision to slash the cash rate for the second time this month to a record low of 0.25 per cent.
National Australia Bank, Westpac and Commonwealth will not be delivering any of this cut to variable mortgage customers.
ANZ’s chief executive officer Shayne Elliott said people are “scared” amid the COVID-19 outbreak and the bank would give home loan repayment holidays to any customers who needed it.
“If you are worried and are feel a bit anxious call up the bank and ask to get that payment holiday,” Mr Elliott said.
“We are not asking questions, if you are a good customer and have made all your payments in the past we are not going to grill you on household expenses.”
The big banks have all rolled out support packages for businesses and homeowners in a bid to help the ailing economy that is headed for recession.
Among the measures for small businesses included repayment holidays, the pausing of interest charges and cuts to small business loan rates.
Some banks are also making available temporary increases to small business overdraft facilities for 12 months.
Borrowers who get pauses on their loans will then have repayments and interest charges restart in six months time, however this could change given the economic uncertainty that lies ahead.
For instance if you have a six-month repayment holiday and you are five years into a 25-year loan, once the loan repayments restart the borrower has an additional six months added to the end of the loan term to help smooth out payments and interest costs.
NAB’s chief executive officer Ross McEwan said the relief to small business and home loan customers was critical during an unprecedented time.
“Businesses in particular need help and they need it now,” he said.
“The changes also offer our home loan customers the option to fix their rate at our lowest rate ever or pause payments to help ease financial pressures.”
While CBA, Westpac and NAB also confirmed any mortgage customers would be able to pause their repayments for up to six months if needed.
ANZ now has the cheapest loan offering on the mortgage market – their two-year fixed loan rate is just 2.19 per cent.
The Australian Banking Association’s chief executive officer Anna Bligh said borrowers including small businesses would be delivered “a lifeline” after facing devastating impact as the coronavirus pandemic worsens.
“It will potentially put more than $8 billion back into the pockets of small businesses who are really struggling,” she said.
“It will apply to all loans that are attached to that small business including their mortgage, vehicle loans, business loans etc.”
Mr Elliott said ANZ had received a tripling of customers in financial need contacting the bank in recent days.
The big banks have also increased the rates on some savings accounts to help deposit holders get better returns on their cash in the bank.
NAB rolled out a 10-month term deposit with a 1.75 per cent rate attached, while CBA and Westpac have introduced the same rate on a 12-month term deposit.
Financial comparison website RateCity’s spokeswoman Sally Tindall said “if you’re having trouble meeting your mortgage repayments the first thing you should do is pick up the phone and talk to your bank”.
“We don’t know what lies ahead, so now is a great time to get your finances in the best shape possible,” she said.
Ms Tindall said this included reviewing your loans, savings rates and budget.
Originally published as Distressed borrowers can have their mortgage repayments paused