New data says the number of extra repayments increased throughout March - June
Many homeowners have been using their lockdown savings to make extra repayments on their mortgages, according to new data from Westpac NZ.
Westpac says that prior to February 2020, approximately 65% of its customers were ahead of their home loan repayments, with the median customer being 8.6 months or $8693 ahead. By the end of June, that figure grew to 66% of customers ahead in repayments, with the median customer being 9.2 months or $9521 ahead.
Westpac says that since homeowners were unable to spend money during Alert Level 4, the extra repayments have helped push the collective mortgage ‘buffer’ for Westpac customers up by $401 million, giving the bank 18.8% of the mortgage market.
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General manager of consumer banking and wealth Gina Dellabarca says that although the financial impact of COVID-19 on households has varied, others have managed to put substantial sums of money towards clearing their debts.
“COVID-19 has caused real financial difficulty for some of our home loan customers through no fault of their own, and we have a great team working to support them through these challenging times,” Dellabarca said.
“However, this data shows another group of New Zealanders were not affected to the same degree, and together managed to put millions of dollars more towards their mortgages as spending opportunities disappeared during lockdown.”
“Normally the increase in extra mortgage repayments is incremental so it’s great to see the numbers leaping forward,” she added.
Westpac saw extra repayments being made throughout March, April, May and June, with the median nationwide figure being $828. She says paying off a mortgage quicker saves customers more in the long run through reduced interest, and will give them extra flexibility if they do run into financial difficulty.
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“For some people, their income has dropped and they may have requested assistance through our mortgage deferral scheme, while others have reduced their spending simply through concerns over the level of current uncertainty,” Dellabarca said.
“For others, they remain on the same level of income and appear to be spending at similar levels at the same time interest rates have been dropping.”
“Either way, the pandemic has allowed our team to have good conversations with our customers about their finances and plans for the future,” she concluded.
“We’re absolutely here to support our customers and understand how COVID-19 has affected them so we can help them through this next period.”
