Mortgage holiday extensions help avert $75 billion home loan blowout

The decision by some banks to extend mortgage deferrals will come as a relief to struggling Australians, who were only a few months away from a financial cliff. But it may have also prevented a potentially devastating shock to the economy.

Around 485,000 mortgage customers have paused their repayments due to coronavirus-induced hardship, totalling $175.5 billion in home loans, according to the Australian Banking Association.

Mozo analysis found that were it not for today's decision to extend mortgage holidays for eligible customers by an extra four months, the potential default figure could have reached $75 billion.

While the Government’s JobSeeker and JobKeeper programs have done a lot to keep households and businesses afloat, for many the payments have proven to be woefully insufficient.

A June survey commissioned by Mozo found that 38% of people on JobKeeper admitted it was not enough to meet their current bills, let alone cover home loan repayments.

53% of mortgage holders surveyed were also worried they would have to sell their home if they were still facing financial hardship once the original mortgage holiday ended. 

RELATED: More support on the way as banks extend mortgage holidays

With millions out of work or getting by on reduced incomes, the continued flow of stimulus is necessary to ease the burden Australians are facing. The question now is whether JobKeeper and JobSeeker will be preserved in some form.

In an interview with Sunrise this morning, Treasurer Josh Fydenberg said another phase of income support - which will be both “targeted” and “temporary” - will be announced in his economic statement on 23 July. 

The comments from the Treasurer follow a surge of infections in Victoria, which has left the state scrambling to re-enter lockdown.

And given Victoria makes up a quarter of the national economy, the reintroduction of restrictions will be an enormous setback in Australia’s road to economic recovery.

“What we know from Victoria is that these are very serious developments. They affect the nation as a whole, and we are at a pivotal moment in the coronavirus crisis,” Frydenberg said.

For more information about the assistance available to households and businesses, along with tips to keep your finances in good health amid the current crisis, browse our guide to coronavirus and your finances.

Home loan comparisons on Mozo - rates updated daily

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    Mozo Experts Choice 2021
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
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    Initial monthly repayment
    1.99% p.a.variable for 12 months and then 2.48% p.a. variable
    2.47% p.a.

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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
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    Initial monthly repayment
    1.75% p.a.
    fixed 3 years
    2.22% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

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    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
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    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.43% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

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    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.19% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid off. Free extra repayments and redraw facility. Zero fees to consider. Min 40% deposit required. Winner of three Mozo Expert's Choice Award for 2021.

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    Fixed Home Loan

    Owner Occupier, Principal & Interest

    interest rate
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    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    2.15% p.a.

    Award-winning low rate home loan that could save you thousands. No application or ongoing fees, fee-free redraws, unlimited additional repayments and an optional offset account for $10/month. Minimum 10% deposit. Winner of Mozo’s Experts Choice Award for Online Home Lender of the Year 2021.^

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*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loans Awards

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