After six months, how have the Big Four banks responded to COVID-19?

author-avatar By on September 11, 2020
After six months, how have the Big Four banks responded to COVID-19?

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As the initial wave of six month mortgage holidays come to an end, how have the Big Four banks helped customers throughout COVID-19?

Almost 500,000 Australians opted to have their mortgage repayments deferred during the COVID-19 crisis according to the Australian Banking Association (ABA) and with repayment deferrals coming to an end, banks are beginning to contact customers to discuss their options.

But the impacts of the COVID-19 crisis are clearly still being felt around the country as the banks expect over 650,000 Australians will need to defer their mortgages until 2021.

Over the last two Fridays, executives from the Big Four banks appeared before a parliamentary committee to discuss their response to the pandemic.

Chair of the House of Representatives Economics Committee Tim Wilson MP says the hearings are part of the parliament’s role in publicly scrutinising and holding the Big Four banks to account.

"The Economics Committee and I are keen to discuss the banks’ response to the pandemic with the benefit of hindsight and bring forward new issues about Australia’s economic recovery," Wilson said.

"Since the start of the pandemic, the Australian Government has introduced a range of support measures in cooperation with the banks. It’s really important that financial institutions are held accountable and that they are treating consumers fairly during what is a difficult time for many Australians.

"We are also keen to hear about the consequences of mortgage and small and medium business loan deferrals, and where there are opportunities for reform of responsible lending laws in light of the RBA Governor’s recent evidence to the committee."

Figures released by each of the Big Four banks show what impact their COVID-19 support measures have had on Australian households.

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.

ANZ

Home loans

  • Cut variable interest home loan rates by between 0.40% pa and 0.50% pa 
  • Introduced low two-year fixed rate of 2.29%pa for owner-occupiers
  • Deferred home loan repayments up to six months

According to ANZ, 85,000 mortgage loan deferral applications were approved for the period 23 March to 10 August. This is 12.1% of all ANZ residential mortgages.

The value of the total loan balance which has been deferred stands at $31.3 billion.

Small businesses

  • Cut variable interest small business loan rates by 0.50% pa
  • Deferred business loan repayments up to six months
  • Support for small and medium business owners to bridge the gap before they receive JobKeeper payments
  • New business loans with deferred payments
  • Waived merchant terminal fees

According to ANZ, over 43,000 business loan deferrals were approved for the period 23 March to 10 August. This makes up 6.4% of all ANZ business loans.

Of these, 41,000 loans belonged to small and medium-sized enterprises (SME).

Other support measures

  • Personal loans: Deferral and loan term extension
  • Credit cards: Deferral of minimum monthly credit card repayments, reduced interest rate, fees waived

According to ANZ, 16,000 unsecured loan deferral applications were approved for the period 23 March to 10 August.

Commonwealth Bank

For personal customers:

According to Commonwealth Bank, to date the bank has:

  • Provided repayment deferrals on over 159,000 home loans, comprising a total balance of over $55 billion
  • Provided repayment deferrals on almost 21,000 personal loans, with a total balance of approximately $339 million
  • Provided repayment deferrals on over 19,000 credit cards
  • Cancelled credit card interest and late fees for March 2020 for those unable to meet their repayments
  • Processed over 170,000 requests for early release of superannuation funds under the Government’s program

For business customers:

  • Offered auto-deferred repayments for over 72,000 small business loan accounts
  • Reduced interest rates by 1.00% p.a. on small business loans
  • Provided new loans and drawdowns to mid-sized business customers of approximately $9.25bn, including those under the SME Guarantee Scheme
  • Approved over 9,000 SME Guarantee Scheme loan applications, totalling more than $830 million. Commonwealth Bank now accounts for around half the loans funded through that Government initiative
  • Provided $20.4bn of new and refinanced facilities to large business customers since February
  • Deferred repayments for large business customers, relating to estimated approximate loan balances of over $290 million
  • Provided covenant waivers to institutional business customers, relating to credit facilities with an estimated total value of over $12.5 billion

[Read: CommBank launches interest-free credit card, just a day after NAB]

NAB

Home loans

  • Deferral of home loan repayments up to six months
  • Lowered fixed home loan interest rates (2.29% p.a. for 1 year; 2.19% p.a. for 2 years and 2.29% p.a. for 3 years)

According to NAB, as at 5 August the bank had over $35 billion in home loan balances deferred across a total of over 86,000 customers, representing 12% of NAB's total home lending book.

Since 30 June, 4,000 customers have cancelled their deferrals.

As at 5 August, NAB had contacted around 24,000 home loan deferral customers and approximately 16% of those contacted have recommenced their mortgage repayments.

Small businesses

  • Deferral of business loan repayments up to six months
  • Waived merchant terminal fees
  • 200 basis point cut on new loans and overdrafts on flagship digital business product QuickBiz
  • 100 basis point cut on small Business Options loans

According to NAB, as at 31 July 2020 it has $20 billion in business loan balances deferred across 38,000 customers, and 47% of those are receiving JobKeeper.

Other support measures

  • Reduced minimum monthly repayment for credit card customers and waived late payment fees
  • Personal loan repayment reduction for up to six months

[Read: NAB launches interest-free credit card in Australian first]

Westpac

According to Westpac, since March 2020 the bank has:

  • Deferred home loan repayments for 138,000 customers, representing $52 billion in mortgage balances
  • Provided COVID-19 relief packages for over 31,000 business customers representing relief on $9.5 billion of lending balances across 76,000 accounts
  • Lent $258 million through over 2,100 business loans backed by the National SME Guarantee Scheme
  • Supported over 200,000 customers to withdraw $1.68 billion from their super under the early access to superannuation scheme

Of the 138,000 customers who deferred their home loan repayments, around half of these have indicated they plan to return to making repayments.


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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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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