Deferred loans ‘back to normal’
More than two-thirds of mortgage and personal loans that had principal and interest repayments deferred due to the impact of Covid-19 were now “back to normal”, says the New Zealand Bankers’ Association.
At the same time, nearly 40 per cent of those loans that had reduced repayments were now back on track.
In March, in consultation with the Government, the Reserve Bank and credit reporting agencies, all New Zealand retail banks offered loan deferrals for up to six months and reduced loan repayments to customers financially impacted by the Covid-19 pandemic.
In August, the option of deferring loan repayments was extended to March 31, 2021.
As of 31 October
● 69 per cent of consumer loans (including home loans) that had deferred all repayments were back to full repayments.
● 37 per cent of consumer loans that had reduced repayments were back to full repayments.
● 69 per cent of business loans that had deferred all repayments were back to full repayments.
● 50 per cent of business loans that had reduced payments were back to full repayments.
It’s great to see . . . people who took up offers to defer or reduce their loan repayments are [getting] back on track. Roger Beaumont, NZ Bankers’ Association
“As we near the end of this extraordinary year it’s great to see that people who took up offers to defer or reduce their loan repayments are now getting back on track,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“This shows that people who took loan deferrals, or reduced their repayments, understand why it’s a good thing to restart repayments if they can. It also shows how banks are [working with] affected customers to support them through tough times.”
The latest Reserve Bank Financial Stability Report noted home loan deferrals peaked at around 8 per cent of mortgage lending but only 1.5 per cent remained on deferral as of early November.
However, the Reserve Bank expected loan impairment rates to rise and banks had increased loan loss provisions in anticipation.