The policies put in place by banks in response to COVID-19 resulted in the repayments of 780,000 loans worth $237 billion be halted to ease the burden of debt on home owners and business owners across Australia.
The Australian Banking Association, who provided this data, also show that of these, 485,063 are mortgages, coming to an accumulative value of $175 billion. These repayments are slated to end in September, which unfortunately coincides with the end of JobKeeper, the ramifications of which were explored in last weeks blog post.
As banks begin checks on customers with deferred loans, Commonwealth Bank’s retail banking boss Angus Sullivan is pledging a policy of forbearance over foreclosure. CBA allowed 127,000 borrowers to defer their repayments to a later date, with that date coming up quickly, Mr Sullivan has said that foreclosure will be used as an absolute last resort.
Angus Sullivan had the following things to say in an interview conducted by the Australian Financial Review:
“It is in our interest and our customer’s interest if we can find a way to support them in difficult times,” he told The Australian Financial Review in an interview “We want to keep them in their homes.”
“People want to be in their homes with their family. There is a lot we can do to support them.”
“We want to come up with a solution that is right for each customer, not a blanket solution that might not be the right answer for a bunch of people,”
“There will be times when it is not in a customer’s interest to extend more forbearance, as there might be something structural in their situation,”
To satiate the demand during this pandemic, CBA has doubled its hardship team to 1400 staff. The team is offering struggling borrowers an option too go interest-only. However, it is inevitable that some people will lose their home due to this pandemic. With 34.5 percent of families in Australia in financial stress, 1.4 million families are struggling to make do, and as the end of JobSeeker and bank’s deferral policies loom, an estimated 100,000 Australian families are at a high risk of defaulting.
CBA is using its Customer Relationship Management system to proactively identify and communicate with its borrowers who are most financially vulnerable to the economic impact of COVID-19.
On the bright side, CBA has said that of its 127,000 total loans that have been deferred, between 15 per cent and 20 per cent of customers are already making repayments, unfortunately, that does leave up to 85% who have yet to begin re-making repayments.
What you can do.
If you have been severely effected by the economic impact of COVID-19, contact us. We are professionals in the lending space, and we work tirelessly for the good of our clients in helping them to find the loan terms that meet their financial and lifestyle needs. So please, contact us today.