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.
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$2,995
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6.30
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$2,867
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1 year - 5.89% p.a. (6.53% p.a.*)
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$2,899
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1 year - 6.19% p.a. (6.45% p.a.*)
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Optimum Fixed Rate Home Loan
- Owner Occupier
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- LVR <80%
- Interest rate
-
5.89
%
p.a.
Fixed 1 year
- Comparison rate
-
6.30
%
p.a.
- Initial monthly repayment
-
$2,867
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- interest rate
-
1 year - 5.89% p.a. (6.53% p.a.*)
2 years - 5.69% p.a. (6.42% p.a.*)
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- Maximum loan to value ratio
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80.00%
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$2,500,000
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Fixed
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-
Principal & Interest
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Owner Occupier
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-
Weekly, Fortnightly, Monthly
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-
yes - free up to $20,000 p.a. during fixed rate term
- Redraw facility
-
yes - free
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$1.00
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no
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Legal and exit fee at cost. Valuation fee charged at cost, starting from $132.
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Fixed Home Loan
- Owner Occupier
- Principal & Interest
- LVR <95%
- Interest rate
-
5.69
%
p.a.
Fixed 2 years
- Comparison rate
-
6.34
%
p.a.
- Initial monthly repayment
-
$2,899
Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.
- interest rate
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1 year - 6.19% p.a. (6.45% p.a.*)
2 years - 5.69% p.a. (6.34% p.a.*)
3 years - 5.69% p.a. (6.28% p.a.*)
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- Fixed loan revert rate
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6.34% p.a.
- Upfront fees
-
$799
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$350.00
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95.00%
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$10,000
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$5,000,000
- type of mortgage
-
Fixed
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Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free up to 1 year in advance
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
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-
yes
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-
Monthly fee only applies to fixed period of loan.
- Other benefits
-
-
- Special Offers
-
$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
Read reviews and learn more about IMB Bank home loans
Go to site -
Unloan Variable
- Owner Occupier
- LVR <80%
- Interest rate
-
5.99
%
p.a.
Variable
- Comparison rate
-
5.90
%
p.a.
- Initial monthly repayment
-
$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.
- interest rate
-
5.99% p.a. (5.90% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$0
- Ongoing fees
-
$0.00
- Discharge Fee
-
$0.00
- Package
-
-
- Maximum loan to value ratio
-
80.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$10,000,000
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
-
- Offset account
-
no
- Split account
-
no
- Other restrictions
-
-
- Other benefits
-
Rate discounted by 0.01% p.a. every year up to a maximum discount of 0.30% p.a..
- Special Offers
-
-
Read reviews and learn more about Unloan home loans
Go to site -
Budget Home Loan
- LVR <80%
- Owner Occupier
- Principal & Interest
- Interest rate
-
6.04
%
p.a.
Variable
- Comparison rate
-
6.07
%
p.a.
- Initial monthly repayment
-
$3,011
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- interest rate
-
6.04% p.a. (6.07% p.a.*)
- Fixed loan revert rate
-
n/a
- Upfront fees
-
$350
- Ongoing fees
-
$0.00
- Discharge Fee
-
$350.00
- Package
-
-
- Maximum loan to value ratio
-
80.00%
- minimum borrowing amount
-
$10,000
- maximum borrowing amount
-
$5,000,000
- type of mortgage
-
Variable
- Repayment types
-
Principal & Interest
- Availability
-
Owner Occupier
- Repayment options
-
Weekly, Fortnightly, Monthly
- Extra repayments
-
yes - free
- Redraw facility
-
yes - free
- Minimum redraw amount
-
$500.00
- Offset account
-
no
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-
yes
- Other restrictions
-
-
- Other benefits
-
The $449 application fee is waived for <80% LVR Owner Occupier Principal and Interest loans.
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-
$4,000 cashback for loans $750,000 and above with a maximum LVR of 80%, settled within 90 days of application for refinancers or 180 for purchase loans. $3,000 for loans between $500k and $749k, $2,000 for loans between $250k and $499k.
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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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