The Press

Mortgage relief still popular

- Susan Edmunds

Some homeowners are facing a tricky future if the Government does not extend the mortgage holiday future, brokers say.

Retail banks agreed to a mortgage holiday scheme in March, which would allow borrowers to defer their payments for up to six months.

But that will run out in September. As at June 30, just under 60,000 people had opted to defer their payments on a total of $20.2 billion, or 7 per cent of total lending. Another 8 per cent had reduced payments.

But demand continues – in the week to July 17, banks received 407 requests to defer payments on $120m in debt, and 887 moved to intereston­ly payments.

That is down from 2644 requests for a mortgage holiday in the week of March 27.

The Reserve Bank is considerin­g extending the scheme, and a decision is expected within weeks. Australia has extended its version by four months.

It is something that Finance Minister Grant Robertson has described as ‘‘justified’’.

A spokesman for the Reserve Bank said allowing more time for the scheme was one option available but not the only one considered.

‘‘While the Australian and New Zealand loan deferral schemes are broadly similar, there are some difference­s between the two jurisdicti­ons with respect to the regulatory framework around defaults and loan restructur­ing,’’ he said.

‘‘Take-up rates of the deferral schemes also differ between the two countries.’’

Katrina Shanks, chief executive of Financial Advice New

Zealand, which represents mortgage brokers, said they were ‘‘very aware’’ of the mortgage holidays and wage subsidies ending soon.

Loan Market adviser Bruce Patten said 67 of his clients had opted for a mortgage holiday or to move to pay only the interest owing on their mortgages. But there was a risk that some could struggle at the end of the deferral period.

‘‘There are definitely a couple who haven’t found a job yet . . . there are definitely people still on 80 per cent of what they would normally earn who won’t find out whether they will go back to 100 per cent until the end of August.’’ About 65,000 people

have signed up to jobseeker support or the

Covid-19 payment since March


Patten said extending the scheme would either disguise the problem for another four months, or help until more people were back on their feet.

Another adviser, David Windler, said inquiries about measures to help with loan payments had tailed off in the past four weeks, but the end of the holiday period was ‘‘one of the factors that might slow the market down a bit’’.

Chris Walsh, of financial research site Moneyhub, said extending a mortgage holiday on a $500,000 loan with an interest rate of 3 per cent would add

$5000 in total to the cost of the mortgage. A $1 million mortgage would increase in cost by

$10,000. ‘‘A mortgage holiday defers repayments, but interest costs still accumulate.’’

 ??  ?? Some people still aren’t back to 100 per cent income, and don’t know if they will be,
one broker says.
Some people still aren’t back to 100 per cent income, and don’t know if they will be, one broker says.

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