Anna Bligh interview on ABC Newcastle about the ABA’s financial hardship campaign.  

Jenny Marchant   

Your biggest cost is probably your rent or your mortgage, and they’re probably also the bills you’ll move heaven and earth to pay if you have to, because we all need somewhere to live. But the number of mortgage holders struggling with payments is increasing. If you find yourself in that position in trouble paying back a loan of any kind really, can the bank help? The Australian Banking Association says yes, it can. You just need to ask. Anna Bligh is the CEO of the Banking Association. Good afternoon. 

Anna Bligh   

Good afternoon, 

Jenny Marchant   

Are you seeing more Australians struggling with debt at the moment? 

Anna Bligh   

We are starting to see a slight increase in the number of people who are defaulting on their payments, not just on mortgages, but also on things like credit cards and personal loans. It’s still a very slight increase, but we’re very aware that the pressure on people after 13 interest rate rises is starting to really wear thin and that’s why we’re issuing the call, you don’t need to tough it out on your own, banks can provide very practical ways through this. 

Jenny Marchant   

What are the kinds of things they can do, then? 

Anna Bligh   

Banks can do a number of things that will make a big difference. They can lower your mortgage or credit card loan payments for a period, they can restructure the length of your loan which will bring your payments down, they can move you on to interest only payments for a while, or depending on your circumstances, can actually defer payments all together for a period of time. There are already more than 20,000 Australians who have taken up these sorts of measures to help them get through. Jenny, I think it sometimes feels very embarrassing or awkward to talk about financial trouble, but there are very well-trained experienced people at the end of the line out of banks call centre, willing to take your call talk through the options. As I said, more than 20,000 people right now are doing just that and we wouldn’t like to think that someone that could have been helped, is holding back because they’re worried about talking about it.  

Jenny Marchant   

Embarrassment is certainly one thing, and look, people might be able to put that to one side. But they might also worry that a bank would, you know, put a red mark next to their name. That it might put them in a poor position further down the track, or it flag something worrisome with the bank. Not everyone wants to admit that they’re having difficulty to their lender. 

Anna Bligh   

You’re absolutely right, I think people are quite fearful that there might be some consequence, but can I say on this issue, the interest of the bank is perfectly aligned with the interest of the customer. What the bank wants you to do over the 30 years of your mortgage is to pay your mortgage back, because that’s good for the bank and it’s good for you. So usually, you sign up for a 20 or 30 year mortgage, and you might have trouble for one year in that 20 or 30 years. Banks would much rather build a bridge over that one year, than see you foreclose on the mortgage. So, you don’t need to be fearful. Banks, as I said, have very experienced teams. Their main objective is to make sure that something like having to sell your house is an option of absolute last resort. But to be very honest, they can help you more if you get to them early. If you start getting into a terrible spiral, where you might be using your credit card to pay your mortgage payments, and then another credit card to pay that credit card, it starts to get very difficult to get out of. But if you’re just worried, even if you don’t need financial help at the moment, but you want to know what your options are, talk to your bank and you’ll know what sort of measures you could take if you get to a point where it’s all just too tough. 

Jenny Marchant   

And there are often charities and community services that can advocate on your behalf to with the bank. That’s okay as well, isn’t it? 

Anna Bligh   

Absolutely. There are a number of organisations that banks work with right across Australia. There’s the National Debt Helpline which is a good place to start. They can also refer you to a financial counselling organisation close to where you live. You know, you’re right. For some people it’s not easy to talk about and sometimes there’s a lot of complicated, financial data there that’s not easy for most of us to get our heads around. There are people who do this for a living, represent you in discussions with your bank, and help you navigate what sometimes can be quite big systems. So, we’re really out there at the moment, encouraging people, even if you’re just a little bit worried, now’s the time to talk to your bank about options. If you’ve started to miss payments, talk to your bank as soon as you can, because they’ve got a toolkit here that’s got a lot of very practical tools in it. They’re already helping thousands of Australians to do just that, but don’t tough it out on your own.  

Jenny Marchant   

Are you seeing the effect of people coming off fixed rate mortgages? Is that a factor here and in how some people might be having trouble with their payments? 

Anna Bligh   

Look, it does apply for some people in that circumstance, but by and large we’ve seen we’re now more than two thirds of the way through those people who took out a fixed loan, at a very low price in the middle of COVID. More than two thirds of those people have already moved on to a variable rate, and there’s no higher evidence of hardship than in that group compared to the wider group of mortgage holders. So people are proving very resilient as you said in your opening, your mortgage is the first thing that people pay out of their salary every fortnight or every month. But often that is starting to mean, for some people, very big sacrifices on the other side of their spending and that might just start to get too much for some people. So, before they get to that point, we want them to start talking to their bank.  

Jenny Marchant   

How much of an issue is by now pay later services? Can a bank help with those, for instance, if they’re not the lender? 

Anna Bligh   

That’s awkward. Certainly, you know, like with all financial products, we know that people sometimes get into trouble with those buy now pay later products. Banks can sometimes help you consolidate your debts. So, if you had a personal loan and a mortgage, and some buy, now pay later, banks can sit down with you and say, well, let’s wrap all of that up into something that’s more manageable for you. Certainly if that’s part of what’s causing difficulty for you in making your other payments, talk to your bank. As I said, they’ve got very flexible tools, their interests are aligned with yours. We are talking hopefully about an interest rate environment that is not going to last forever. You know, banks will expect that we’ll start to see interest rates come down at some point, and so between now and then they’re offering a sort of bridge, if you like to help customers get from here to there.  

Jenny Marchant   

When might that be? Are you hoping before the end of the year, or potentially sooner?  

Anna Bligh   

I think we’d all like it sooner rather than later, but it’s a very dangerous business to be predicting what might happen next with the Reserve Bank. At some point, we would expect they will moderate. It won’t be 30 years time, you know, it will be sometime in the foreseeable future and that’s how banks are thinking about it. They will look at the customer and say, so you’ve been a good customer for 12 years, you’ve got another 20 or 15 – 16 years on your mortgage, here’s a one-year temporary problem, how do we get you from here to there?  

Jenny Marchant   

Anna Bligh. Thanks very much. 

Anna Bligh   

Thanks a lot Jenny