Banks are here to help.
7 September 2020
Australia’s banks supported their customers as the country entered the COVID-19 pandemic and they continue to support them on the way out.
As the initial wave of 6-month loan payment deferrals come to an end, banks have begun to contact customers for their 6-month assessment and to discuss the next stage of support and assistance.
Of the more than 900,000 loans which have been deferred across the pandemic, at least 450,000 loan deferral customers will be assessed in coming weeks as they approach the end of their deferral in September and October.
These include 105,000 business loan deferrals to small and medium businesses, of which 65,000 will be assessed by the end of September, and 40,000 by the end of October. 260,000 mortgages are also due to be assessed, 80,000 by end of September and 180,000 by end of October.
ABA CEO 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, with an additional 5000 new or redeployed staff working to ensure customers understand their options.”
The next steps presented to customers during these assessment calls will include:
- 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
- Customers who will be unable to pay their loan over the longer term will be offered tailored assistance that addresses their needs
ABA CEO Anna 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.”
Of the 900,000 loans that have had payments deferred, 13% had already resumed repayments by the end of July. Some banks have estimated that an additional 100,000 people began resuming payments in the month of August.
Ms Bligh continued, “As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it.”
Data above: ANZ, CBA, WBC, NAB, Bendigo, Bank of Queensland, Suncorp
Covid deferrals: facts and figures – as at July 31 2020
- In July, 81,000 deferred loans, worth $22.4 billion, resumed repayments.
- By the end of July, 109,000 loan deferrals worth $41 billion had resumed repayments (around one in seven of total deferrals).
- Overall, more than double the amount of deferred mortgages have resumed repayments (80,000) than deferred small business loans (38,000).
- One in five of all remaining outstanding loans were receiving full (13%) or partial (7%) repayments.
- Of remaining outstanding small business loans, one in five (22%) were making full repayments and one in twenty (5%) making partial repayments.
- Customers with deferred mortgages are also continuing to make full (11%) or partial (9%) repayments.
Data above: ANZ, CBA, WBC, NAB
Access to credit opens up opportunities and fulfills aspirations. Getting it right requires the right balance between consumer protections and the flow of credit.
Interviewed by AM’s Peter Ryan, ABA CEO Anna Bligh talked about the substantial drop in loan deferrals since their peak during the pandemic, falling from 900,000 to 300,000.