The big four bank has allowed borrowers to either move from Principal & Interest (P&I) to Interest Only (IO) for six or 12 months, or renew an IO period for six or 12 months.

Announced on Monday and effective immediately, any customers who wish to take advantage of the offer must contact an ANZ broker for approval.

Eligibility criteria for the IO switch/extension includes:

  • The customer must not be requesting any additional lending
  • Loans must be either P&I or IO expiring within next 3 months
  • Customers are unable to split their loan under this process
  • The customer must be employed and currently receving income
  • Any reduction in income must be temporary and due to COVID-19
  • The ANZ loan being renewed must be at least 6 months’ old (for 6 months IO), and 12 months old (for 12 months IO).

Borrowers will be required to undergo a credit check to confirm their eligibility. 

In a statement released to brokers, ANZ said the offer was aimed at assisting customers who would like a short-term reduction in their repayment commitments.

"This process aims to assist customers who wish to proactively manage their cash flow during this period as an alternative to putting their repayments on hold under ANZ's COVID-19 Assistance offering," ANZ said. 

ANZ is the third big four bank to announce IO switches and extensions as part of COVID-19 support measures.

Commonwealth Bank (CBA) announced at the start of June it would be allowing customers to apply for a one-year IO extension, or switch if they are currently making P&I repayments, without requiring a serviceability assessment.

CBA Group Executive Angus Sullivan said the move was made to further support customers through the economic fallout from the pandemic. 

"We recognise that as the coronavirus situation evolves and customers start returning to work, they may require alternative temporary assistance measures to help them get back on their feet sooner," Mr Sullivan said. 

"As part of this we are temporarily allowing existing home loan customers to apply for a one-year interest-only extension or switch if they are currently making principal and interest repayments without requiring a serviceability assessment.

Westpac also announced in May it would allow eligible home loan customers to switch from P&I repayments to IO, or extend their current IO home loan term for a further 12 months without a serviceability assessment. 

In addition to IO switches or extensions, all three big four banks have offered support to home loan customers by allowing borrowers to defer repayments for six months.

Recent figures from the Australian Banking Association show lenders have granted home loan deferrals to 480,727 customers, whose total borrowings come to $173.4 billion.

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