Mortgage hurt lingers

THREE in five mortgage customers who signed up to repayment holidays during the pandemic are still relying on the program to get by.

Banking sources say at the end of August 300,000 home loan customers in Australia were still delaying payments.

During August, 100,000 borrowers are understood to have come off the scheme.

The scheme was originally scheduled to wind up by the end of this month or in October but some customers could be given a further four months, which would see many through until February.

Banks have started contacting hundreds of thousands of customers who have deferred their payments to see if they can start paying again.

The scheme allows customers who have suffered income hits to avoid making any repayments for up to six months.

Under the program rolled out in March, about 485,000 mortgage customers took out repayment breaks with the nation’s seven largest banks – the Commonwealth Bank, ANZ, National Australia Bank, Westpac, Bendigo and Adelaide Bank, Suncorp and Bank of Queensland.

Nationally 900,000 loans, including small business loans, were deferred and only 25 per cent have resumed payments.

The Australian Banking Association’s chief executive officer Anna Bligh said they had to increase staff to cope with the huge pool of customers who had sought help.

“The loan deferral measure offered to customers by Australia’s banks has led to the largest ever customer contact process with an additional 5000 new or redeployed staff working to ensure customers understand their options,” she said.

At last week’s parliamentary committee hearings into the big banks’ response to the pandemic ANZ boss Shayne Elliott and CBA boss Matt Comyn were questioned.

Mr Elliott said about 84,000 ANZ customers deferred $31bn in mortgages, with an average loan size of $369,000. He said of these about 15 per cent were very concerned about resuming payments and probably needed more help.

“As the deferrals finish, we believe most will resume paying down their loan,” he said.

CBA’s Mr Comyn said about 154,000 CBA customers had deferred mortgages and about 20,000 customers had exited the deferral program by the end of August.

Customers who are coming out of the payment deferrals can ask to extend their deferral period for another four months. They could also be given the option to make interest-only payments or extend their loan term.