ANZ CEO Shayne Elliott answers your banking questions
ANZ CEO Shayne Elliott tackles your questions on the prospect of negative rates, what a loan holiday means for future payments and whether you can still borrow from the bank. Check out his key messages for customers.
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The financial situation of thousands of Australians has been upended in a matter of days as businesses shut down or workers’ hours are dramatically reduced.
The unprecedented economic situation has left many desperate for advice.
Today, ANZ CEO Shayne Elliott was online to answer your banking questions and had some key messages for customers, urging them to:
– seek payment deferrals if you need them. There is no impact on your credit rating or standing with the bank,
– talk to your bank if you need further assistance,
– don’t use credit cards and other expensive forms of debt to pay your daily expenses,
– if you are really in a tough spot, seek advice and counselling.
Here’s more of his answers:
Q. I have elderly relatives who are worried that if interest rates go into the negative space that banks will reduce savings balances as a result. They are considering withdrawing their meagre savings and keeping the cash at home. Will or can the banks apply negative interest to cash accounts?
A. I hear this question a lot. We have seen rates go negative in some parts of the world, but that is generally only for big Institutions and NOT deposits from Mum and Dad retail depositors. The Reserve Bank Governor has been on the record saying he doesn’t support going to negative rates in Australia and doesn’t see that in the future. I don’t think it’s at all likely that banks will go in to negative rates for retail deposits so I would not be concerned. It’s very risky to keep cash at home and I would be very concerned if people started doing that.
Q. If I have an investment property and the tenants have stopped paying the rent what relief can I get from my mortgage repayments?
A. At ANZ (and many other banks), we will offer you up to six month payment deferrals for any home loan whether its your home or an investment property. You should ask your bank but if you bank with us, I can confirm you will be eligible. That means you don’t have to pay anything for up to six months.
Q. Everyone refers to this crisis in terms of six months, but the economic impact has to last longer, doesn’t it? What will happen if people put their loans on hold and still can’t pay at the end of it?
A. In reality we just don’t know how long this will last. I tend to agree with you that its longer than six months. We may be in hibernation or semi lockdown for three to six months but its going to take a long time for things to go back to normal. that will require a vaccine and reliable, readily available testing. Until then its hard to imagine we can open borders and travel again, for example. The good news is that the government and the banks are willing and able to assist and help people through this period, however long it is. It will get harder for sure but we can continue to do the right thing. If people cant pay after the six month hold, we then have a range of other options to consider and of course it all depends on what the world looks like then. The whole hibernation strategy is built to buy time for that recovery to happen so people can be back at work and able to meet their commitments
Q. If I have to put my mortgage on hold will my credit rating be affected in the future? Is there an alternative of reduced payments. And what happens at the end of the six months, will my payment amount go up because I’ve taken the break?
A. The answer is NO. If you seek the deferral with your bank, it will NOT affect your credit rating. The agreement the banks have with our regulator is that we can offer this deferral without impacting your credit rating. That doesn’t extend to other kinds of arrangements which may or may not impact your rating. If you take the six month break, when the loan goes back to normal, you will have to pay a little bit more or you may be able to extend the life of your loan.
Q. Are banks still lending to individuals and businesses at this time or have you backed away from that?
A. YES. While the crisis is front and centre for everyone, there are still businesses and individuals out there who need to borrow for good reasons and we are here to help. In fact we had one of the strongest few weeks in our recent history as more customers reach out looking for loans. For some it was to help them through the crisis, but let’s not forget that as devastating as this crisis is for many, for others there is still growth and opportunity and we are here to assist in that. So open for business, willing to lend.
Q. Are bank branches going to stay open throughout this? My parents still don’t trust online banking and want to keep going into the branch if they need to deal with anything.
A. Our branches are open and we are doing everything we can to keep them open but we do need to keep them safe too. It’s not a great idea for people to be out and visiting branches – purely from a health perspective, particularly the elderly. We also have our own challenges as sometimes our own people are unable to come to work in the branches – if they feel unwell and need to isolate. That can mean we are unable to open every single branch every single day. We have updates on our website about which branches might be temporarily closed. It’s usually a very small number but rest assured we are open. I would however note that we see too many people coming to branches that really don’t need to be there – to check balances etc. I strongly urge you all to help your parents and other elderly people to try the digital solutions – its easy and keeps everyone safer.
You can see more replies in the comments below.
Originally published as ANZ CEO Shayne Elliott answers your banking questions