CommBank, NAB & Westpac among banks offering mortgage repayment deferral extensions

author-avatar By on July 08, 2020
CommBank, NAB & Westpac among banks offering mortgage repayment deferral extensions

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Australians still experiencing financial hardship due to COVID-19 have been offered a further lifeline by their lenders.

A deferral extension of up to four months will be offered to some banking customers on a case by case basis. 

However, borrowers will be urged to return to full repayments as quickly as possible. 

Australian Banking Association (ABA) chief executive Anna Bligh said in the long run it was better for the financial wellbeing of individuals, families and businesses to return to full loan repayments. 

“Those who are able to repay their loans will resume doing so, which is in the best interests of those customers and allows support to be directed to those who need it," Ms Bligh said.

"Encouragingly, many customers have already chosen to resume making 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.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayment
 
2.59% 2.55% $1,599 Go to site
2.89% 2.89% $1,663 Go to site
Budget Home Loan OO P&I
2.68% 2.74% $1,618 Go to site

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 03 August 2020. View disclaimer.

Customers with reduced incomes and ongoing financial difficulty due to COVID-19 will be contacted as they approach the end of their deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan.

The ABA said banks will work with customers to find the best options to restructure or vary their loan. Options may include:

  • Extending the length of the loan
  • Converting to interest-only payments for a period of time
  • Consolidating debt
  • A combination of these and other measures.

Around 800,000 Australians have deferred their repayments since the start of the pandemic, totalling $260 billion in home loans. 

Economists and industry figures had raised concerns the country is approaching a 'fiscal cliff' when repayment holidays end at the same time as JobKeeper and JobSeeker at the end of September. 

NAB chief executive Ross McEwan said it had already been checking in with customers to understand their circumstances and help them accordingly. 

“While a significant portion of businesses and homeowners that we have spoken to have started their repayments again, there are clearly still many customers who may need support for a bit longer," Mr McEwan said.

“Bankers will speak with customers about their individual circumstances and the options appropriate for them which may include loan restructure, determining alternative fund sources, hardship assistance or further deferral for up to four months." 

Westpac acting chief financial officer Gary Thursby said it would support customers where needed, but urged them to restart repayments where possible. 

“For customers who remain under stress but can still contribute towards their loan repayments, we will provide support where we can help work through options that may be available to adjust their loan," Mr Thursby said. 

“However, we anticipate that a significant number of customers will be able to resume regular repayments when their deferral term ends.

"We expect these customers to start their repayments again and we would encourage as many people as possible to do so,”

Commonwealth Bank chief executive Matt Comyn said it was committed to providing support to customers and businesses to help them get back on their feet and inject vital financial stimulus into the economy.

“To date, our coronavirus measures since March 2020 have provided about $15 billion in direct financial support to customers and stimulus for the economy," Mr Comyn said.

"Supporting customers who continue to experience financial difficulty is a priority and we are tailoring our support to make sure each customer gets the advice and assistance that suits them."

The Australian Prudential Regulation Authority (APRA) contacted the banks this week to advise them the approach to not treat the repayment deferral period as a period of arrears could be extended up to 31 March 2021.

APRA Chair Wayne Byers said it was fortunate the sector had the resources to continue to support borrowers experiencing financial hardship. 

“These measures are designed to incentivise ADIs [Authorised Deposit Institutions] to continue to support their customers through an extended period of uncertainty, while at the same time facilitating the restructure of eligible loans in a measured and timely manner," Mr Byers said.


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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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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