Big 4 prepare to halt COVID repayment holidays

The big four banks will stop granting automatic mortgage holidays to COVID-19-affected homeowners as they contact the tens of thousands of mortgage customers who have not yet started repaying their loans.

Last year during the height of the pandemic, hundreds of thousands of homeowners took advantage of repayment pauses as the major banks, in an effort to avoid widespread foreclosures, granted repayment holidays. But now banks are preparing to halt the acceptance of new applications for repayment holidays in preparation for the end of the program in March, according to a report by The Brisbane Times. A note from National Australia Bank to mortgage brokers said that it would stop accepting new applications after 20 January.

“To meet regulatory guidance, we will shortly be removing repayment pauses as an option for COVID-19 relief,” NAB said. Hardship assistance will still be available on a case-by-case basis, and existing deferrals would not be affected, according to the note.

NAB has provided 110,000 mortgage repayment holidays since March 2020, the Times reported.  According to data from November, the latest available, 7,000 mortgage accounts worth $3.6 billion had not yet resumed repayments. However, fewer than 50 customers have asked NAB for a repayment holiday in the past month.

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ANZ has not yet set a specific date it would stop accepting applications, although a spokesman told the Times that “regulators have made it clear that mortgage deferrals will cease at the end of March.” ANZ has approved 96,000 repayment holidays during the COVID-19 pandemic. Seventy-two thousand of those have resumed payments.

“We continue to accept requests from customers experiencing financial difficulty and work with them to understand their circumstances and propose options best suited to their individual positions,” the ANZ spokesman said.

Westpac said 145,000 of its mortgage customers took repayment holidays. About three-quarters of those have since resumed payments.

“Customers with ongoing financial challenges will receive tailored support on a case-by-case basis,” a Westpac spokeswoman told the Times.

A Commonwealth Bank spokesman told the publication that the lender has now “moved to the next phase of support” for customers, including contacting those who are approaching the end of their deferrals.

“We know that there will be some customers who are unable to make their repayments at the end of their deferral, and we have a range of options, including switching to interest-only repayments, available for customers alongside our existing range of customer hardship solutions,” the spokesman said.