Loan deferrals decline, but low income earners still face hardship post-Covid
![Person at home looking at documents, facing financial hardship due to Covid impacts.](https://cdn.mozo.com.au/images/atwood/13068/financial-hardship-loans.jpg)
The Australian Banking Association (ABA) has recorded a decline in the number of Australians requesting assistance from their banks on the basis of financial hardship.
Almost 69,000 people have received hardship assistance since July this year when the banking industry announced a second Covid assistance package. This included more than 27,000 home loan deferrals and 4,000 business loan deferrals.
While around 12,000 hardship approvals were made over the last month, this marks the smallest increase in requests. ABA chief executive Anna Bligh said it shows people are slowly getting back on track financially.
“Banks have been on-hand to assist their customers throughout the pandemic, however it’s heartening to see the need for assistance declining as many states and territories come out of lockdown and as borders begin to open,” Bligh said.
But as Mozo research from earlier this year shows, some of these support measures could actually leave you worse off in the long-run. Deferring something like a home loan (aka taking a ‘mortgage holiday’) could add to your repayments down the line or require you to extend your home loan timeline, since you weren’t paying down the loan and potentially not covering interest repayments to the set schedule.
Low income earners doing it tough
It’s no surprise that people with insecure income streams are still facing significant financial challenges in the face of Covid.
Granted, a portion of the economy did see some recovery in between the 2020 and 2021 lockdowns. However, research from the Brotherhood of St. Laurence found there wasn’t the same respite for low-income earners who faced ongoing reduced working hours and diminished employment opportunities.
Looking at the period between October 2020 and March 2021, the report found those earning in the bottom 20% of salaries remained 19% less able to meet their everyday financial commitments compared to pre-Covid levels. Their increasing debt and reduced superannuation funds also signal longer-term impacts for this group of Australians.
In light of this, the report authors recommend government assistance programs remain in place to better support this vulnerable group as we once again emerge from lockdowns around the country. But it seems state and territory governments are already enacting change in the opposite direction, with Covid disaster payments now being phased out in Victoria, NSW and the ACT as vaccination targets are met.
So, if you’re still facing financial hardship, get in touch with your banking provider to see what options are available – and double check how these support schemes could affect your finances long-term. If you’re looking for insight into managing your money right now, read our advice for saving money on a smaller income.
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$595
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5.69
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6.34
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5.69
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6.34
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$0
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$0.00
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yes - free
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no
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5.99
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Variable
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5.90
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p.a.
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$2,995
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
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5.99
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5.90
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$0
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$0.00
- Discharge fee
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$0.00
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yes - free
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yes - free
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no
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- 80.00%
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- $10,000
- Maximum borrowing amount
- $10,000,000
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- Variable
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$2,995
BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.
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$300
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$395.00
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no
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6.14
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$3,001
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$134
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$350.00
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yes - free
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yes - free
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yes
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6.09
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6.11
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$3,027
Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.
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$250
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yes - free
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yes - free
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no
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- $80,000
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6.09
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- Comparison rate
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6.13
%
p.a.
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$3,027
Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.
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6.09
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6.13
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$595
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$0.00
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$250.00
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yes - free
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yes - fees apply
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no
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
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- Type of mortgage
- Variable
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6.14
%
p.a.
Variable
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6.16
%
p.a.
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$3,043
Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.
- Interest rate
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6.14
%
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6.16
%
p.a.
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$350
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$0.00
- Discharge fee
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$400.00
- Extra repayments
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yes - free
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-
yes - free
- Offset account
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no
- Maximum loan to value ratio
- 60.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
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Flex Home Loan
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6.14
%
p.a.
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6.38
%
p.a.
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$3,043
Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.
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6.14
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$250
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$250.00 yearly
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$300.00
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yes - free
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yes - free
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yes
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6.14
%
p.a.
Variable
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%
p.a.
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$3,043
Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.
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6.14
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6.39
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p.a.
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$350
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$248.00 yearly
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$400.00
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yes - free
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yes - free
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yes
- Maximum loan to value ratio
- 60.00%
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- $150,000
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- $10,000,000
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6.25
%
p.a.
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6.20
%
p.a.
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$3,079
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.
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6.25
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p.a.
Fixed 3 years
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6.20
%
p.a.
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$350
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$0.00
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$400.00
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yes - up to $10,000 p.a.
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yes - free
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no
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- 70.00%
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Offset Home Loan
- Fixed
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- Principal & Interest
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6.25
%
p.a.
Fixed 3 years
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6.42
%
p.a.
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$3,079
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6.25
%
p.a.
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6.42
%
p.a.
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$350
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$248.00 yearly
- Discharge fee
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$400.00
- Extra repayments
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yes - up to $10,000 p.a.
- Redraw facility
-
yes - free
- Offset account
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yes
- Maximum loan to value ratio
- 70.00%
- Minimum borrowing amount
- $150,000
- Maximum borrowing amount
- $10,000,000
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Fixed Rate
- Owner Occupier
- Principal & Interest
- <80% LVR
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Initial monthly repayment
-
$3,174
Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.
- Interest rate
-
6.54
%
p.a.
Fixed 2 years
- Comparison rate
-
7.10
%
p.a.
- Upfront fees
-
$160
- Ongoing fees
-
$0.00
- Discharge fee
-
$160.00
- Extra repayments
-
yes - free up to to lesser of 5% of original fixed loan amount, or $5,000 each year
- Redraw facility
-
no
- Offset account
-
Optional - $10 per month - 1 year fixed term only
- Maximum loan to value ratio
- 80.00%
- Minimum borrowing amount
- $20,000
- Maximum borrowing amount
- -
- Type of mortgage
- Fixed
- Repayment types
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- Availability
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- $3,000 cashback for eligible First Home Buyers, $2,000 cashback when you refinance loans of $250k+, apply from 1 Dec 2022, settle within 180 days.
Read our Mozo Review to learn more about this ANZ Fixed Rate
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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. You can change the loan amount and term in the input boxes at the top of this table. 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.
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