22 banks say mortgage holidays won't affect credit scores

author-avatar By on April 06,2020
22 banks say mortgage holidays won't affect credit scores

Source: Wisr Credit

It has been confirmed that six month home loan deferrals won't affect customers' credit scores.

The Australian Banking Association (ABA), which represents 22 member banks, confirmed this today after there was talk last week of deferrals potentially affecting borrowers' credit scores.

However, ABA chief Anna Bligh said customers still need to get on the front foot with communicating their hardships to their bank.

“If you are in need of assistance it’s important you contact your bank as soon as possible, with your first port of call being the website or the smart phone app due to the very high volume of calls coming into call centres,” she said. 

“Australia’s banks are here to support customers who have lost their jobs or significantly lost income because of COVID-19, through initiatives such as offering a six month deferral on mortgage repayments.

"Customers in these circumstances should not have to worry about their credit rating as well."

For customers who were already behind in repayments when they were granted a deferral, banks will not report the repayment history, but after the hardship period ends, banks will "determine how to report the repayment history information" according to the ABA.

Financial Rights Centre chief Karen Cox welcomed the announcement.

"People calling our advice services have so much to contend with right now: The stress of not being able to pay their bills, fears for their own health, and fears for loved ones," she said.

"They should not have to worry about their ability to access credit when this is all over.

"We call on the rest of the finance industry to follow suit."

The ABA's member banks include the big four and other larger banks such as ING, Citi, and Macquarie.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayment
 

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 01 June 2020. View disclaimer.

REIQ calls for easing of stamp duty

Queensland's peak real estate institute has called on the Queensland Government to relax stamp duty amid the coronavirus crisis.

Among the measures proposed, the Real Estate Institute of Queensland (REIQ) has suggested:

  • A 75% reduction in stamp duty for the period of the pandemic.
  • In the 18 months after the pandemic:
    • a removal of stamp duty for those aged 65+
    • a 50% reduction in stamp duty where residential investment property purchases are committed to the permanent rental market in the state for three years or longer
    • a 40% reduction in stamp duty for all other residential property 

Currently, stamp duty on a $500,000 home is $8,750.

For investors, that figure is $15,925.

The REIQ also called to extend the First Home Buyers Grant to established housing - currently, it only applies to new housing. 

REIQ chief Antonia Mercorella said the proposed measures could help the market rebound more quickly, aiding the economy.

“Queensland’s residential real estate sector is worth over $1 trillion and employs over 50,000 Queenslanders directly with many more employed in associated industries," she said.

"Activity within the real estate sector contributes in excess of $30 billion every year to the Queensland Government.

“A significant decrease in stamp duty payable on residential investment properties, qualified by enforceable commitment by investors to making that property available to the permanent rental market, will have the dual effects of stimulating investment confidence and activity.

“It will position Queensland as a highly attractive investment market and ensure adequate supply is maintained to meet increasing demand.”

The REIQ said these proposed measures were spurred on by the Federal Government announcing a moratorium on rental evictions, which will cause investors to "lose confidence", and that increased rental demand and decreased property investment is "a looming social time bomb".


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is a journalist with more than four years of experience, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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