Banks defer 100,000 loans in last week alone

author-avatar By on May 08, 2020
Banks defer 100,000 loans in last week alone

Photo by Nathan Hurst on Unsplash

Banks have deferred an extra 100,000 loans, including 50,000 home loans, in just the last week to help customers through the COVID-19 pandemic.

New figures from the Australian Banking Association (ABA) show a total of 643,000 loans have now been deferred, with the total values of these loans now over $200 billion. 

ABA Chief Executive Anna Bligh said the figures revealed the economic fallout from coronavirus was still unfolding, and continued support from banks was needed. 

“New data released today shows that in just one week an extra 100,000 customers have had their loans deferred, including 50,000 home loans, to take the pressure off household and business budgets as they navigate through this pandemic,” Ms Bligh said.

“These updated figures, together with figures not previously reported, bring the total number of loans deferred by Australia’s banks as a result of the COVID-19 pandemic to over 643,000, of which approximately 392,000 are home loans.

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, 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.



According to Ms Bligh, the total value of loans deferred increased by at least $20 billion in just one week.

“These new figures, released today, shows banks working overtime to ensure assistance is given where needed to customers who are affected by this crisis," she said. 

“The surge in demand for assistance from banks shows that the economic impacts continue to be felt, and by no means is the nation through this crisis."

Putting home loan repayments on hold could free up an extra $1,834 per month for a borrower with a $400,000 mortgage, according to NAB. 

But while the deferral of loan repayments has been welcome relief to many experiencing financial hardship, deferring repayments could cost borrowers more in the long run.

That's because while repayments are deferred, interest is still accruing on the loan balance, increasing the length of the loan and potentially costing tens of thousands of dollars.

CBA approves half a billion in SME loans 

Commonwealth Bank (CBA) has approved more than $555 million in loans for small and medium-sized businesses (SMEs) through the Government-backed SME Guarantee Loan Scheme. 

The scheme, launched in late March, aimed to provide SMEs with quick and easy access to funds to help get through the economic hibernation brought on by the coronavirus.

CBA Group Executive Business Banking, Mike Vacy-Lyle said the bank has helped more than 6,500 customers whose businesses have been impacted by the pandemic. 

“Getting funds quickly to our customers means they have the cash flow they need to pay for critical expenses like wages, supplier payments and other overheads," Mr Vacy-Lyle said.

“We are doing all we can to help. The sheer demand we are seeing means our teams are working around the clock to help as many customers as possible and our priority right now is to get funds into accounts as quickly as we can."

Of the $555 million in loans approved, 42% were for New South Wales, followed by Victoria (27%) and Queensland (16%). 

Almost one in five businesses were in retail trade (18%), followed by construction (16%), accomodation, cafes and restaurants (14%), and business services (12%). 


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 2020) 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, 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.

*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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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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