Help on loans is still an option

ONE in eight mortgage customers who deferred their payments because of the impact of COVID-19 are still unable to meet their repayments – but can get further help.

For some customers, this may include extensions to their deferral period, lower repayments, interest-only terms or a lower interest rate.

During the pandemic about 1 million loans – mortgages and business loans – were put on hold, but now just 60,600 mortgages, 11,300 business loans and 6900 unsecured loans are on hold with the big four banks.

But some customers are still seeking loan deferrals, with more than 650 customers approved last month to delay repayments.

Australian Banking Association chief executive Anna Bligh said help would still be on offer by speaking to their lender’s hardship team.

“Anyone who is worried about their financial circumstances should be talking to their bank as soon as possible,” Ms Bligh said. “Banks have supported customers going into COVID and they are determined to support them on the way out. Every customer is different and the solutions for everyone will be different.”

During the pandemic, there were fears many borrowers would run into severe financial trouble when mortgage deferrals finished, but Ms Bligh said this would now be avoided.

“There’s not going to be thousands of people falling off a cliff on March 31,” she said.

“Those who are still in trouble (on that date) will be assessed by a hardship team.”

The ABA has set up a new online financial assistance hub to help customers get all the information they need.

But from April, banks will have to start reporting customers in hardship arrangements to credit reporting agencies and this will stay on a credit file for 12 months.

Customers who sought help last year were given a sixmonth pause on their loans.

Repayment holidays for most struggling customers were automatically given over the phone or via email.

Financial Counselling Australia’s Fiona Guthrie urged customers to talk to their banks sooner rather than later.

“If you don’t get the help you need, or you are overwhelmed, then come and talk to a financial counsellor,” Ms Guthrie said.

“The earlier you talk to your bank or creditor the better … explain what your situation is and start putting in plans. You will have more options that way.”

She said creditors wanted to “meet with customers halfway” to come up with a payment solution.