Australia’s banks will stop sweeping loan deferral schemes brought in at the height of the pandemic. Picture: Joel Carrett/AAP
Australia’s banks will stop sweeping loan deferral schemes brought in at the height of the pandemic. Picture: Joel Carrett/AAP

Banks signal end of COVID-19 loan freezes

Australia's banks will stop sweeping loan deferral schemes brought in at the height of the pandemic, as economic stabilisation prompts a cooling off in demand for financial hardship provisions.

The country's major four banks have begun stopping mortgage holidays, which were implemented industry-wide last year allowing homeowners and businesses to pause repayment obligations for up to six months.

A further four month extension was available in October to customers who were still financially damaged by the downturn.

The Australian Prudential Regulation Authority (APRA) has indicated the COVID-19 deferral period would cease by March 31, however banks have already started cutting off access to the scheme.

NAB has confirmed it will stop taking COVID-19 deferral applications. Picture: NCA NewsWire/Daniel Pockett
NAB has confirmed it will stop taking COVID-19 deferral applications. Picture: NCA NewsWire/Daniel Pockett

Early wind-downs are partly being fuelled by a stronger economic recovery from the coronavirus recession, with the Australian Banking Association flagging in December that more than 90 per cent of deferral loans have resumed regular payments.

At the height of the deferral period in July, nearly 900,000 mortgages and small business loans were frozen, a value of about $245.4bn.

ABA chief executive Anna Bligh said the need for wide-scale packages in response to the virus had become less important and banks were moving to models where support was designed around the needs of each customer.

"What we are seeing is a much smaller group of people in very difficult circumstances than banks had anticipated we would be seeing at this point in the COVID experience," Ms Bligh said.

Australian Banking Association chief executive officer Anna Bligh. Picture: Bianca De Marchi/AAP
Australian Banking Association chief executive officer Anna Bligh. Picture: Bianca De Marchi/AAP

"There are tools that banks have in their toolkit to help people who took a deferral and are still not able to move back to full payments and they're working individually with those customers."

National Australia Bank confirmed Wednesday would be the last day loan customers would be able to apply for a COVID-19 deferral, which would provide them with a two-month repayment freeze till the end of March.

NAB personal banking executive Rachel Slade said customers needing ongoing assistance would still have access to ongoing support.

"We will continue to provide support to these customers based on their individual circumstances, such as through reduced loan repayments, payment moratoriums, employment support, including resume and interview skills, and access to financial councillors," Ms Slade said.

NAB personal banking executive Rachel Slade.
NAB personal banking executive Rachel Slade.

ANZ said about 24,000 home loans remained paused and it was still accepting requests from customers experiencing financial difficulty.

"While ANZ has been supporting our customers through this period of uncertainty, regulators have made it clear that mortgage deferrals will cease at the end of March," an ANZ spokesman said.

"There are a number of options for those who are still experiencing difficulty, whether COVID-related or not. These include restructuring their lending to reduce repayments, partial payments or short-term repayment pauses."

The major Melbourne-based bank also confirmed the majority of loan deferrals had resumed normal repayments.

Westpac also confirmed it was assisting customers on a case-by-case basis, while the Commonwealth Bank has implemented a foreclosure moratorium until September for customers who accessed COVID-19 financial hardship packages.

"We are contacting customers as they approach the end of their initial and extended deferral periods to discuss their individual circumstances," a CBA spokeswoman said.
"We also have existing solutions in place for customers facing hardship."

 

Originally published as Banks signal end of COVID-19 loan freezes


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