Aussies may be unable to defer mortgage repayments anymore

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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.

Lender

Variable
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UNLIMITED REDRAWSSPECIAL OFFER
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

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Variable
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100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
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100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

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Variable
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NSW/VIC/SA METRO & INNER REGIONAL AREAS
NSW/VIC/SA METRO & INNER REGIONAL AREAS

Variable Home Loan (Principal and Interest)

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Variable
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REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
NO ONGOING FEESFREE REDRAW FACILITY
  • Rate Match Guarantee. Tic:Toc will match the rate on identical variable P&I home loans. T&C's Apply.
NO ONGOING FEESFREE REDRAW FACILITY

Live-in Variable Loan (Principal and Interest) (LVR < 90%)

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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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *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. Rates correct as of June 27, 2022. View disclaimer.

“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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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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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