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.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.54% p.a. | 5.58% p.a. | $2,852 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.49% p.a. | 5.40% p.a. | $2,836 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.64% p.a. | 5.89% p.a. | $2,883 | Principal & Interest | Variable | $250 | $250 | 60% |
| Promoted | Disclosure | ||||||||||
5.64% p.a. | 5.89% p.a. | $2,883 | Principal & Interest | Variable | $248 | $350 | 60% |
| Disclosure |
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."
There's good news today for Australians struggling to pay their mortgages, with the major banks extending loan repayment holidays until January. Treasurer @JoshFrydenberg joined us to discuss. https://t.co/d3dDNE25SY pic.twitter.com/8NBvH2jxfr
— Sunrise (@sunriseon7) July 7, 2020
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.
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