Lenders have begun to contact borrowers who have deferred mortgage repayments to see whether they can restart payments.
The six-month mortgage holiday offer that almost 500,000 Australians took up has come to an end, and banks are now discussing with customers what the next stage of support and assistance may look like.
More than 900,000 loans have been deferred since the start of the pandemic, and at least half of that number will be assessed in the coming weeks.
Of the loans deferred, 262,000 are home loans, of which 80,000 will be assessed by the end of September, and 180,000 by the end of October.
Over 105,000 business loans to small and medium businesses have deferred loan repayments, and 65,000 of these will be assessed by the end of September, and 40,000 by the end of October.
Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
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.
Australian Banking Association (ABA) chief executive Anna Bligh said the operation to assist customers experiencing financial hardship was massive but vital.
“The loan deferral measure offered to customers by Australia’s banks has led to the largest ever customer contact process in the industry’s history, with an additional 5000 new or redeployed staff working to ensure customers understand their options," Ms Bligh said.
“Customers know what’s best for them. It’s the bank’s job to set out all the options and implications and ensure customers have the information and the time to make the right decision to suit their needs.”
For borrowers who have deferred loan repayments, lenders will outline the following steps:
- Those who can resume repayments at the end of their deferral will be required to do so;
- Those still in difficulty, will work with their bank to restructure or vary their loan, including converting to interest-only payments for a period of time, or extending the term of the loan;
- Following the assessment, once the bank understands the customers' circumstances, in some cases, a further 4-month deferral may be granted, but this will not be automatic; and
- Customers who will be unable to pay their loan over the longer term will be offered tailored assistance that addresses their needs
Of the 900,000 deferred loans, 13% had resumed repayments by the end of July, with lenders estimating an additional 100,000 borrowers had resumed repayments in August.
"As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it.” Mr Bligh said.
ANZ launches free home loan check-in
ANZ has launched a free 15 minute home loan check-in to review how much borrowers' repayments are, their frequency, how long it will take to pay off the loan and how much equity there is.
ANZ Home Loans General Manager John Campbell said the scheme encourages borrowers to be proactive in managing their home loan.
“Home loans are one of the largest financial commitments households will make in their lifetime and it should not be a ‘set and forget’," Mr Campbell said.
"With so much change and uncertainty at the moment, what was best for you when you first took out the loan may no longer suit your current needs."
The check-in is open to everyone, doesn't require any paperwork or preparation, and can be done over the phone or in-branch.
ANZ Home Loan Check-In Ambassador Angela Sibley said the check-in helped to manage her family's finances after her husband lost her job.
"When we did the Check-In, it was a great personalised conversation. The fact that you can talk to a real person is very reassuring, especially during uncertain times," Ms Sibley said.
"We asked questions and they answered them openly and reaffirmed our decisions.
"If anything, it’s just stressed how important ongoing management of your home loan actually is."
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 2020. 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.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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