Hundreds of thousands of mortgage customers unable to make repayments
An alarming number of Australians are still relying on home loan repayment holidays, as lenders explore options for those with ongoing financial troubles.
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Three in five mortgage customers who signed up to repayment holidays during the pandemic are still relying on the program to get by.
Banking sources say at the end of August 300,000 home loans customers in Australia were still delaying making payments.
During August, 100,000 borrowers are understood to come off the scheme.
The scheme was originally scheduled to wind up by the end of this month or in October but some customers could be given a further four months breathing space which would see many through until February.
Banks have started the arduous process of contacting hundreds of thousands of customers who have deferred their payments to see if they can start paying again.
The scheme allows customers who have suffered income hits during the pandemic to avoid making any repayments for up to six months.
Under the program rolled out in March about 485,000 mortgage customers took out repayment breaks with the nation’s seven largest banks including the Commonwealth Bank, ANZ, National Australia Bank, Westpac, Bendigo and Adelaide Bank, Suncorp and Bank of Queensland.
Nationally 900,000 loans including small business loans have been deferred during the pandemic and only 25 per cent or about 217,000 have resumed payments.
The Australian Banking Association’s chief executive officer Anna Bligh said they had to bolster staff to cope with the huge pool of customers who had sought help.
“The loan deferral measure offered to customers by Australia’s banks has led to the largest ever customer contact process with an additional 5000 new or redeployed staff working to ensure customers understand their options,” she said.
At last week’s parliamentary committee hearings into the big banks’ response to the pandemic ANZ boss Shayne Elliott and CBA boss Matt Comyn were questioned.
Mr Elliott said $31 billion in home loans had been deferred during COVID-19.
“As the deferrals finish, we believe most will resume paying down their loan,” he said.
About 84,000 ANZ customers deferred $31 billion in mortgages – the average loan size is $369,000.
Mr Elliott said of these about 15 per cent of people were very concerned about resuming payments and probably needed more help.
CBA’s Mr Comyn said about 154,000 CBA customers had deferred mortgages during the pandemic.
By the end of August he said about 20,000 customers had exited the deferral program.
Customers who are coming out of the payment deferrals have the option including to possibly extend their deferral period for another four months.
They could also be given the option to make interest-only payments or extend their loan term.
Originally published as Hundreds of thousands of mortgage customers unable to make repayments