The Reserve Bank and the New Zealand Bankers Association agreed for the home loan deferral scheme to run for six months to support borrowers affected by COVID-19
Reserve Bank of New Zealand is considering an extension to the six month mortgage holiday offered in March, according to Finance Minister Grant Robertson.
The Reserve Bank and the New Zealand Bankers Association agreed for the home loan deferral scheme to run for six months to support borrowers affected by COVID-19, but after Australian banks agreed to extend their own deferral scheme for four more months, Robertson says New Zealand may be in a position to do the same.
In a statement to the Herald, a Reserve Bank spokesperson said that an extension was being considered, but that it is “not the only alternative.”
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, they said.
Take-up rates of the deferral schemes also differ between the two countries, and so, in partnership with the country’s banks, we will need to determine the best course for the New Zealand context, they said.
58,885 borrowers had secured payment deferrals accounting for $20.2 billion in home loans, personal lending, credit cards and overdrafts since June 30, according to NZBA figures. 79,166 have been approved for reduced repayments, including reduced principal and/or interest payments.
NZBA chief executive Roger Beaumont says any decisions around an extension would involve first assessing customer needs.
Banks are responsible lenders and suggest customers only defer all loan repayments if they need to, Beaumont said.
[An extension] would also involve discussions with regulators and credit reporting agencies on any impact to responsible lending obligations and how the deferred loans are treated, he said.
Mortgage advisers say they have had to explain the cost of a mortgage holiday to customers, and have advised them to take it only if it is needed. Non-banks and advisers say that some customers have since been in a position to restart full repayments, though there are no solid statistics as of yet.
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