Banks to offer options as mortgage stress to bite once more
Thousands of Australians are facing the economic jolt of having to repay their mortgages and business loans again as the deferral scheme put in place to help people through the pandemic comes to an end.
Anna Bligh has resigned from the Medibank board (Photo: AAP Image/Paul Braven)
More than 900,000 loans were deferred during the initial months of the pandemic and the Australian Banking Association said at least 450,000 of those would be assessed in coming weeks as they approach the end of their deferral in September and October.
Banks have started contacting customers to discuss the next stage of the program.
The ABA said there about 105,000 business loan deferrals to small and medium businesses, of which 65,000 would be assessed by the end of September, and 40,000 by the end of October. About 260,000 mortgages are also due to be assessed, 80,000 by end of September and 180,000 by end of October.
ABA chief executive Anna Bligh said 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. An extra 5000 new or redeployed staff were used by banks to contact customers.
Borrowers would be presented with options. Those who can resume repayments at the end of their deferral period would be required to do so.
Those who were still in difficulty may need to restructure or vary their loan, including converting to interest-only payments for a period of time or extending the term of the loan.
Some borrowers may be granted a further four-month deferral, but this would not be automatic.
Customers who were unable to pay their loans over the longer term would be offered tailored assistance.
“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,” Bligh said.
Of the 900,000 loans that have had payments deferred, 13 per cent had resumed repayments by the end of July. Some banks estimated that an additional 100,000 people began resuming payments in the month of August.
“As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it.”
