Banks are pushing mortgage customers on repayment holidays to start paying again
Banks are urging customers who took a home loan holiday to start making payments if they are able to do so. But those who are still struggling to make ends meet can continue to defer their loans. Here’s how.
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Mortgage customers who have deferred their loans and are now able to make repayments again must do so, the banks have warned.
More than 485,000 mortgages took out repayment holidays during the COVID-19 pandemic to give them urgent breathing space but when their six-month deferral ends they will be forced to start paying back their loans.
In an announcement released on Wednesday by the Australian Banking Association, chief executive officer Anna Bligh said customers who could meet repayments must.
“Those who can pay will have to restart their loans, any longer deferral is just not in their best interest,” she said.
“Encouragingly many customers have already chosen to resume making repayments.”
However, borrowers who are still struggling to make ends meet will be contacted by their lender towards the end of the six-month repayment holiday to strike an agreed repayment arrangement or variation to their loan.
Where mortgage holders are eligible for an extension, they will be given up to an additional four months.
Other options available include extending the length of the loan, converting to interest-only repayments for a period of time, consolidating debt or a combination of these options.
If during or at the end of the deferral term customise continue to be severely impacted and cannot make repayments they will be assisted by their bank’s financial hardship team.
Latest ABA statistics show in Australia 800,000 loans including business loans have been deferred totalling $260 billion.
An additional 5000 frontline staff have been put on to deal with customers who are struggling financially.
Ms Bligh said the next phase of support would avoid “a cliff for customers in September”.
Many economists have feared a financial cliff looms then when there is the double whammy of the government’s JobKeeper assistance ending and mortgage holidays winding up.
ANZ chief executive officer Shayne Elliott said for customers still seeking help they should do so.
“For customers who have not taken advantage of the six-month deferral that option is still open to them,” he said.
“I would strongly encourage anybody uncertain about what the future holds or those who have been hanging on up until this point to get in contact with the bank.”
While Westpac said they had helped 130,000 mortgage customers defer repayments for up to three months and a further three months is available on review.
NAB said they have started checking in with customers.
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The Reserve Bank of Australia board met again on Tuesday and kept the cash rate on hold at 0.25 per cent – where it has sat since March.
Governor Philip Lowe’s said during the pandemic there had been “a severe downturn”.
“Many people have lost their jobs and there has been a sharp rise in unemployment,” he said in his speech.
“The Australian economy is going through a very difficult period and is experiencing the biggest contraction since the 1930s.”
He said since March 800,000 Australians had lost their jobs while many others had only kept them because of government and other support programs.
Originally published as Banks are pushing mortgage customers on repayment holidays to start paying again