Westpac starts to see missed payments, more hardship calls

Westpac chief executive Peter King says more people have been missing a mortgage payment in the six months to March, with increasing calls to the bank’s hardship line, but that customers have not been pushing the “help button”.

The boss of Australia’s second-largest mortgage lender told the Australian Banking Association conference on Wednesday that there were some indications of financial stress from the bank’s customers.

Westpac boss Peter King says more customers are ringing the bank’s hardship lines for a chat.Credit: Eamon Gallagher

“In last six months to March, we did see an increase in the early-stage delinquencies,” King said. “Not all of the 30-day delinquencies are rolling into 90-day delinquencies, but what we are seeing are more customers ringing our hardship lines to have a chat, so I think they’re definitely reading the paper and thinking about higher interest rates.”

But despite the increased calls, King said most were not yet translating into hardship arrangements. “Certainly, a lot more people are really testing the waters, wanting to understand what’s available but not pushing the button on needing help,” he said.

In May, bank profit results showed the number of customers falling behind on loan repayments was still low by historical standards, but bankers have been gearing up for more customers in stress as a wave of ultra-cheap fixed-rate loans expire.

Bendigo and Adelaide Bank chief executive Marnie Baker said she was yet to see a notable change over the past six months but that the bank was ready to assist customers feeling the pressure.

“At the moment, we haven’t seen much of a change,” she said. “But there are a number of rate changes that are yet to fully come through the system, and so they’re not necessarily being felt by borrowers yet. Within our own organisation we’ve kept very close to our borrowers, just making sure, and we’re all sitting there ready with teams to assist customers as they need us.”

Baker said about 84 per cent of borrowers at Bendigo and Adelaide Bank still had financial buffers in places, and that it would be “around the edges” that stresses would begin to show.

“Employment is key,” Baker said. “If people are employed, and they’re earning an income, even if they do get into tighter circumstances, they can work with their bank in an arrangement to make sure they can get through those tougher times. But there’s a little bit still to play out, and it depends on future decisions by the Reserve Bank.”

Bendigo and Adelaide Bank chief executive Marnie Baker: “Employment is key.”

King said while the employment market was strong, interest rates would impact it at some point as the Reserve Bank looked to double down on inflation.

“The level of employment in the economy will come off a little bit,” King said. “And interest rates are a blunt tool that doesn’t impact everyone evenly, unfortunately. It’s a very uneven impact.”

Baker and King said customers should speak with their banks early if they found themselves in a difficult position.

“We are about keeping people in their houses, not kicking them out of their houses,” Baker said.

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