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If you were behind in repayments before, banks won’t report the repayment history information for the deferral period, they will leave that field blank for the duration of the crisis deferral period.

For every dollar that an Australian bank lends, regulation requires them to hold a certain amount of capital. If banks don’t charge interest, even if the loan is deferred, the loan must then be treated as ‘impaired’ under the accounting and banking rules. The bank is then required to hold more capital to support that impaired loan.

If banks stopped charging interest on the hundreds of thousands of deferred loans during the COVID19 pandemic they would not have enough capital to provide new loans.

That would not be in the best interest of Australians and the need to support the Australian economy.

Customers who can restart paying their loans should do so.

Customers with reduced incomes and ongoing financial difficulty due to COVID-19 may be eligible for a further deferral period of up to four months, during which time they will be expected to work with their bank to find the best solution to assist them to return to repayments through a restructure or variation to their loans.

This four-month extension will not be automatic, it will be provided to those who genuinely need some extra time.

As banks implement phase two of their COVID-19 support, they will continue to act in accordance with the Guiding Principles of the Banking Code of Practice and communicate in a clear and timely manner and treat customers in a fair and ethical manner.

2020 Banking Code of Practice

Banks have deployed over 5000 extra frontline staff to help speed up response times.

If you cannot make a payment at the end of your six month deferral period or your four month extension, your bank will work with you on the best solution to suit your needs.

The extension takes effect from the end of an individual customers first six month deferral period.

This four month extension will not be automatic, it will be provided to those who genuinely need some extra time.

No. Participating member banks will not apply or require payment of the capitalised interest at the end of the deferral period.

It is a condition of the deferral scheme that participating member banks will not require payment of capitalised interest at the end of the 6 month term. If your bank is participating in the scheme and has told you that it will require such a payment, please ask to speak with someone more senior at the bank.

Customers with reduced incomes and ongoing financial difficulty due to COVID-19 may be eligible for a further deferral period of up to four months, during which time they will be expected to work with their bank to find the best solution to assist them to return to repayments through a restructure or variation to their loans.

This four-month extension will not be automatic, it will be provided to those who genuinely need some extra time.