Aussies may be unable to defer mortgage repayments anymore

author-avatar By on January 20, 2021
Aussies may be unable to defer mortgage repayments anymore

As the March deadline for mortgage deferrals approaches, banks across the country are beginning to stop applications for new freezes on mortgage repayments.

Some of Australia's major banks have said they will stop accepting new applications for deferrals. 

NAB, which has deferred repayments on more than 110,000 home loans since March 2020, said today (20 January) is the last day new deferrals will be granted, to allow for two-month deferrals finishing at the end of March this year as mandated by APRA. 

Only 7,000 NAB customers are still on paused repayments.

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.

Base criteria of: a $400,000 loan amount, variable, fixed, 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. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

“While it is pleasing to see most of our customers have resumed repayments we know some customers will need our ongoing assistance," NAB Personal Banking Group Executive Rachel Slade said. 

"We will continue to provide support to these customers based on their individual circumstances, such as through reduced loan repayments, payment moratoriums, employment support, including resume and interview skills, and access to financial councillors.

“We ask any customers who are struggling financially to contact us as soon as possible so we can help them get to the other side in the best position possible.”

See also: Still have a mortgage deferral? Here's how your lender will help

Other major banks - ANZCBA and Westpac - didn't provide specific details on what date they'll stop accepting new deferrals, but in comments provided by bank spokespeople to Savings.com.au, the common theme was that:

  • Most customers are already making regular repayments again, and
  • Help will still be available to those who need it on a case-by-case basis

ANZ said: 

"While ANZ has been supporting our customers through this period of uncertainty, regulators have made it clear that mortgage deferrals will cease at the end of March."

"We continue to accept requests from customers experiencing financial difficulty and work with them to understand their circumstances and propose options best suited to their individual position.

"There are a number of options for those who are still experiencing difficulty, whether COVID-related or not. These include restructuring their lending to reduce repayments, partial payments or short-term repayment pauses.

"When entering into payment arrangements with customers we seek to make sure they are sustainable and realistic."

CBA said: 

"We have moved to the next phase of support for customer recovery. This includes contacting all home loan customers as they approach the end of their temporary loan repayment deferral periods to discuss their individual circumstances."

"We know that there will be some customers who are unable to make their repayments at the end of their deferral and we have a range of options, including switching to interest only repayments, available for customers alongside our existing range of customer hardship solutions."

Westpac said:

"Westpac has assisted more than 145,000 mortgage customers with home loan deferrals since the start of the COVID-19 pandemic and approximately three quarters have re-commenced repayments."

"Customers with ongoing financial challenges will receive tailored support on a case-by-case basis. We look at a range of options as part of this process, such as providing more time to get back to regular repayments.

"Customers experiencing financial difficulty can access personalised support through our dedicated hardship assistance team."

Majority of deferred mortgage borrowers resume repayments ahead of March deadline 

Initially set to run for six-months from March to September 2020, Australia's banks and the Australian Banking Association (ABA) announced a further extension on COVID mortgage deferrals, ending 31 March 2021. 

This extension was supposed to be granted to customers who were still struggling to begin their repayments, while those who could do so were encouraged to start repaying their loans. 

And start repaying they did: In late June 11% of all home loans ($195 billion) had deferred repayments, but as of the end of November, only $49.5 billion (2.8% of all housing loans) still had temporary repayments

Seek help if needed

Speaking to ABC NewsRadio today, ABA CEO Anna Bligh said there are still plenty of people who are still in difficulty. 

"I’m very pleased to say that we’ve now seen almost 90% of those people, the 900,000 Australians who deferred their loan repayments, are now back making those payments," Ms Bligh said. 

"There are still some people whose deferrals have not yet reached the end date and banks are working with them individually.

"But what we are seeing is a much smaller group of people in very difficult circumstances than banks had anticipated we would be seeing at this point in the COVID experience."

For those who are still in difficulty, Ms Bligh said the best thing to do is to speak to the bank. 

"There are tools that banks have in their toolkit to help people who took a deferral and are still not able to move back to full payments and that they’re working individually with those customers," she said. 

"The best thing for the customer, though, is not to be on deferral for so long that they start to lose equity in their most valuable asset."


Photo by Emiliana Hall on Unsplash

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 2020. 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 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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, Performance Drive 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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