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Need to pause your mortgage repayments? Here are the banks’ deferral policies

Need to pause your mortgage repayments? Here are the banks’ deferral policies

24 Mar 2020 | Home Loans, Investor Loans

This is one article we hope you never have to read. But if COVID-19 has impacted your income to the point where you may need to pause your mortgage repayments, then we’ve broken down the banks’ deferral policies for you.

Late last week the Australian Banking Association (ABA) announced that small businesses affected by the coronavirus would have their loan repayments deferred for six months.

But when it came to home loan customers, there was no similar, wide-sweeping announcement from the ABA.

Rest assured though that all the big four banks are allowing customers who have been impacted by the coronavirus to hit pause on their mortgages for up to six months.

Many of the smaller lenders are also allowing deferral relief measures too, including Macquarie and Bank of Queensland, for example.

Below we’ve outlined the deferral policies each of the major banks are offering customers. It’s important to note, however, that these aren’t the only hardship options available to you, so if you’d like to find out more, please get in touch.

Commonwealth Bank

All CBA home loan customers are now eligible to defer loan repayments by up to six months. A digital registration process is available for any home loan customer wishing to defer their repayments.

Here’s a full statement on the support CBA is providing for personal customers.

Westpac

“Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review,” the bank said in a statement.

Here’s the statement and support package details in full.

NAB

Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.

For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month, NAB says.

Check out their statement for more details on their support package.

ANZ

If you’re experiencing financial difficulty due to COVID-19, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised (see below).

If you pause your repayments, ANZ will check in with you after three months.

ANZ have also released a statement detailing their full customer support package.

Other lenders

For all other lenders please check their website for more details, as APRA has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.

If you’re having trouble finding the details, google: [your lender’s name] + home loan deferral coronavirus.

Failing that, check out their website’s ‘Newsroom’ or ‘Media’ page for recent announcements.

An important final note

It’s important to note the above policies only state that they’ll defer your repayments – it’s likely they won’t stop interest from accruing on your home loan.

For example, as ANZ notes in their statement, home loans with repayments paused will have their “interest capitalised”.

Basically, that means your home loan amount will continue to grow while repayments are on pause, as any unpaid interest will be added to your outstanding loan balance.

With that in mind it’s worth noting there are other options you can explore to reduce your home loan repayments each month besides hitting the pause button, so please feel free to get in touch with us if you’d like to explore those avenues.

RBA cuts cash rate to record low 0.25% amid COVID-19 outbreak

RBA cuts cash rate to record low 0.25% amid COVID-19 outbreak

20 Mar 2020 | News

The Reserve Bank of Australia (RBA) has cut the cash rate to a record low of 0.25% following an emergency meeting due to the impact the coronavirus is having on the economy.

RBA Governor Philip Lowe said in a statement the move was due to the virus causing “major disruptions to economic activity across the world”.

“This is likely to remain the case for some time yet as efforts continue to contain the virus,” said Governor Lowe.

Governor Lowe added the cash rate cut would help support jobs, incomes and businesses so that when the health crisis recedes, the country will be well placed to recover.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band,” said Governor Lowe.

Hasn’t the RBA already cut the cash rate this month?

That’s right. And ordinarily, the RBA board only meets on the first Tuesday of every month. But as we’re all well aware, these aren’t ordinary times so an emergency RBA Board meeting was called.

The RBA last held its regular meeting on March 3 and cut rates to 0.5% because it believed the coronavirus outbreak was going to hit the economy hard.

However, over the past fortnight, global financial markets have been in freefall as countries all around world reel from the economic fallout of the COVID-19 pandemic.

Want to know what this rate cut means for your home loan?

It’s worth noting that lenders don’t automatically reduce your monthly repayments when they drop interest rates.

With this being the second RBA cash rate cut this month – and the fifth since June 2019 – if you need some extra financial breathing space each month due to the coronavirus outbreak then please get in touch.

We’re ready to work through your options with you, whether that be asking your lender to drop your monthly repayments, discussing budgeting tools, refinancing, or seeking hardship arrangements.

Homeowners impacted by COVID-19 encouraged to contact lender

Homeowners impacted by COVID-19 encouraged to contact lender

18 Mar 2020 | Home Loans

Homeowners who have had their income impacted by the coronavirus outbreak are being encouraged to seek out hardship options with their lender.

The economic impact of the coronavirus outbreak is evolving daily, if not hourly, across the Australian financial landscape.

Businesses have closed, jobs have been lost, and casual workers have had their hours slashed from work rosters.

If you’re one of the many Australians who have been affected – or are worried that you soon will be – rest assured that you can talk to your lender about hardship options without it affecting your credit report.

Here’s a statement released by Commonwealth Bank CEO Matt Comyn, for example:

“We encourage our retail customers who may be facing hardship due to impacts of the virus to contact us so that we can provide them with assistance, for example hardship options including deferral of loan repayments.”

What are some other options?

If you don’t believe you need to seek financial hardship, but you’d still like a bit of extra breathing room, it may be worth considering refinancing or renegotiating your home loan.

There have been four rate cuts in the past year – including one last month that reduced the RBA’s official cash rate to a record low of 0.5%.

And here’s the thing: lenders don’t automatically drop your repayments when the interest rate falls.

So if you haven’t asked your lender to reduce your home loan rate over the past year – or even the past month – then you may be able to reduce your monthly repayments by refinancing.

Get in touch

We understand that these are tough and uncertain times, yet rest assured we’re here for you no matter what lies ahead.

If you’d like us to help you explore either your hardship or refinancing options then please get in touch – we’re ready to assist you any way we can.

First home buyer numbers spike to 10 year high

First home buyer numbers spike to 10 year high

13 Mar 2020 | First Home Buyers, News

First home buyers are throwing themselves into the property market in numbers not seen since 2009.

The number of owner-occupier first home buyer loan commitments reached its highest point in ten years in January, with newcomers taking out 9,945 loans (seasonally adjusted), according to ABS data.

That’s a 3.2% rise on the previous month and a 20% increase on January 2019 (7921 loans).

A recent upwards trend in the home loan market was also reported in figures released by The Australian Prudential Regulation Authority (APRA).

The APRA data showed a 12.4% increase in the value of new housing loans settled by authorised deposit-taking institutions (aka lenders) in the December 2019 quarter.

What’s fuelling the spike in first home buyers?

Two things, mainly.

The first is the federal government’s First Home Loan Deposit Scheme.

The scheme, which started on January 1, can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

As of late February, it was reported that the majority of the 5,000 places available through 25 non-major lenders for this current financial year were still available to be reserved by potential first home buyers. So if you’d like to find out more get in touch!

The other main contributing factor to the growth spurt in first home buyer numbers is low rates.

Earlier this month the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to a new record low of 0.50%.

This came after three cash rate cuts in 2019, with the latest as recent as October.

And interestingly, RBA Governor Philip Lowe has hinted more rate cuts could be on the way in coming months, saying the RBA will continue to closely assess the implications of the coronavirus

Get in touch

For those thinking of entering the property market for the first time there’s a lot of recent changes to consider – including the record-low RBA cash rate and the federal government’s First Home Loan Deposit Scheme.

So if you’re thinking about purchasing your first home soon, get in touch today, we’d love to help you through the process.

RBA cuts cash rate to record low amid coronavirus concerns

RBA cuts cash rate to record low amid coronavirus concerns

4 Mar 2020 | Interest Rates

The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.50% as the coronavirus outbreak impacts global financial markets.

RBA Governor Philip Lowe said the coronavirus has clouded the near-term outlook for the global economy and global growth in the first half of 2020 will be lower than earlier expected.

“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Governor Lowe said in a statement.

“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”

The RBA previously cut the official cash rate to 0.75% in October, which was the third interest rate cut in 2019.

More rate cuts on the way?

Governor Lowe also hinted that more rate cuts could be on the way in coming months, saying the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.

“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.

Prime Minister Scott Morrison earlier in the day said he expected the big banks to “do the right thing” by Australians and pass on any rate cut in full.

“And honestly, I don’t see it any different to what Qantas did when we called out to Qantas and we said, we need your help to get some people out of China,” the Prime Minister said.

Want to know what this rate cut means for your home loan?

With this being the fourth RBA cash rate cut since June 2019, it can get a bit confusing as to just how much of these cuts your lender is passing on to you.

The good news is we’re following the market closely and can tell you which lenders pass this fourth rate cut on to their customers in full, and which lenders don’t.

So if you’d like to find out, then please get in touch – we’d be happy to help break it down for you.