Australian banks say they will extend Covid-19 moratorium for some borrowers
Some borrowers who put off home loan repayments for six months due to the coronavirus will be able to get an extra four-month moratorium, banks say.
But the Australian Banking Association wants people who can afford to start making repayments to do so when the current deferment period runs out in September.
The move to restart repayments came as the economy of Australia’s second-most populous state, Victoria, was hit by a second wave of lockdowns, covering greater Melbourne, that business leaders say will devastate businesses that were just beginning to recover from the first wave of the coronavirus pandemic.
It also comes amid warnings from the Reserve Bank and many economists that turning off support for businesses in September, as is currently planned, risks sending an Australian economy that is already in recession and suffering from extremely high unemployment over a cliff.
Banks announced six-month moratoriums on interest payments, covering both business and home loans, in March, as the RBA pumped money into the economy.
Interest continues to accumulate while repayments are paused.
The ABA said banks would contact borrowers who were in financial difficulty due to the crisis near the end of their six-month deferment period.
About 5,000 extra bank staff have been employed to work through loans and contact borrowers, it said.
The arrangement has been blessed by the prudential regulator. The Australian Prudential Regulation Authority currently allows banks to hold loans covered by a moratorium on their books as if they were fully up-to-date, and this will continue for loans given an extra four-month deferment.
Australia’s biggest bank, the Commonwealth Bank, said many retail and business borrowers had already restarted payments.
“While many customers are doing better than we expected, we know that some customers will require further support and we will contact them over the coming months to discuss the options that might be available to them,”
the CBA chief executive, Matt Comyn, said.
The bank said that since the start of the pandemic it had given loan repayment deferrals to about 130,000 home loan borrowers and provided other support to about 100,000 business customers.