Mortgage relief for tens of thousands

Tens of thousands of New Zealand households have deferred or reduced mortgage repayments since the nationwide lockdown began, new figures show.

The Bankers’ Association yesterday published aggregated data on how many customers had cut repayments or had their payments deferred altogether.

Sometimes described as a “mortgage holiday”, the Governmentapproved scheme enables banks to allow customers to reduce or suspend mortgage repayments for up to six months, without the Reserve Bank considering those loans to be nonperforming when assessing bank solvency. The interest on the loans continues to accrue.

The figures reveal how many households are taking up the scheme.

The association said that across its membership, payments had been lowered on 41,436 loans worth $14 billion, and repayments had been deferred entirely on 40,918 loans worth $14.5b.

“We have also provided $2.1b in new lending to our personal customers,” said a statement on the association’s website. The money has been lent to just over 20,000 customers.

The figures describe the total number of loans where repayments have been varied, so the precise number of households that have taken up the scheme is not clear.

As well as the mortgage deferral scheme, the Government is contributing through a $6.25b scheme to lend working capital to business.

Operated through the registered banks, the scheme will see the Government lend $4 for every $1 the banks put up on loans of up to $500,000.

The association said banks were continuing to lend to businesses regardless of the scheme. “In addition to the Government scheme we’ve also offered $5.3b in new lending to nearly 10,000 business customers.”

Urging customers not to visit bank branches unless they needed to, the banks said they had a number of tools to help customers, including lower interest rates and fees.

They also urged customers to be “extra vigilant”, claiming fraudsters were using the pandemic to prey on people.

“We fully support the bold actions taken by the Government and the Reserve Bank so far. They have helped free up the financial system so we can focus on dealing with the crisis.”

The association is expected to continue to publish updated figures on its website.

On Thursday, Reserve Bank governor Adrian Orr told MPs that New Zealand was “lucky to have the banks that we have”, with the sector estimated to have around $100b in capital over and above regulatory minimums.

But he urged the banks to consider their “social responsibility” and longterm sustainability, because of their influence on the economy.

Earlier in the week, Finance Minister Grant Robertson told business leaders that it had taken some time to complete documentation for the business loan scheme.

If any business was unhappy with the conversation they had with a bank about the scheme, they should try again now, Robertson told BusinessNZ members.

“Go back now that we’ve signed the deeds, now that the banks have got themselves the full level of comfort they needed to be part of the scheme, and have that conversation again.”