More support on the way as banks extend mortgage holidays for struggling borrowers

Australian banks will be extending support for struggling customers, announcing today that borrowers who have paused loan repayments will be able to defer for an extra four months.

While banks have reported that many retail and business customers have resumed loan repayments at least partly, there are thousands more that are facing ongoing financial difficulties.

With only a few months before JobKeeper and JobSeeker payments unwind, the outlook for the nation’s mortgage holders seemed uncertain. Today’s announcement should quell some of the concerns a worse crisis is around the corner. 

“This next phase of bank support will avoid a ‘cliff’ for customers in September and give them the breathing space they need to work with their bank and get back on their feet financially” said Australian Banking Association CEO Anna Bligh.

To date, some 800,000 Australians have taken advantage of the loan deferral scheme, totalling $260 billion in loans. In an interview this morning, Treasurer Josh Frydenberg said that around 60% of those are residential mortgage loans.

“[The banks] know that their customers need to get to the other side of this pandemic, but it’s going to be a struggle in the weeks and months ahead,” he said.

“That’s why they put in place the original six month loan deferral program. That’s why they’re now extending it for another four months.”

Who will the decision apply to?

Importantly, the option to extend the deferral period is only available to those in dire need. Extensions will not be granted automatically — rather, banks will assess individual customers when their current deferral is expiring.

“Those who are able to repay their loans will resume doing so, which is in the best interests of those customers and allows support to be directed to those who need it. Encouragingly, many customers have already chosen to resume making repayments,” said Bligh.

Banks will also work closely with customers to restructure or vary loans. This may involve extending the loan term, converting to interest only payments for a specific period, or working to consolidate debt.

If customers are unable to resume payments once the deferral period ends, they will be able to apply for their bank’s hardship process, which will help devise a long-term solution that suits their individual circumstances.

RELATED: $75 billion blowout averted by banks’ mortgage holiday extensions

NAB CEO Ross McEwan said the changes will give those who have been hard-hit by the coronavirus pandemic some time to get back on their feet.

“The recent news of increased COVID-19 detection has brought additional uncertainty to many businesses, individuals and families. Many are doing it tough – and banks play a critical role in providing support,” he said.

Commonwealth Bank CEO Matt Comyn, whose bank has granted deferrals on almost 130,000 home loans, said customers will be contacted over the coming months to discuss how they are faring.

“Supporting customers who continue to experience financial difficulty is a priority and we are tailoring our support to make sure each customer gets the advice and assistance that suits them,” he 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 - last updated 8 December 2023

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Home Variable Rate

    Owner Occupier, Principal & Interest, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.15% p.a.

    Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

  • Mozo Expert Choice Badge
    Variable Rate Home Loan Special Offer

    Package, Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.51% p.a.

    Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.

  • Mortgage Simplifier

    LVR<80%, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.43% p.a.

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.


* 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.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.