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Mortgage holidays set for extension

Minister of Finance Grant Robertson says the Reserve Bank could extend mortgage holidays for struggling borrowers. 

Wednesday, July 29th 2020, 8:53AM

The finance minister believes extending mortgage holidays to help hard-up home loan customers would be "justified", as speculation grows the Reserve Bank will extend the original scheme, due to expire in September. 

During the Covid-19 lockdown in March, the Reserve Bank, government and retail banks agreed a support package to grant payment deferrals or shifts to interest-only for six months, to help hard-up households.

As the six-month period nears its end, politicians are keen to avoid a spate of home loan defaults and are reviewing further breaks for those who have lost their jobs. 

Robertson told Stuff: “The advice that I've had from the Reserve Bank is that they are considering looking at the extension of the mortgage deferral schemes – of the support that they give to enable the banks to provide those schemes – and I think judging from the conversations I've had with trading banks, that would be justified."

It comes as data shows borrowers are still requesting payment deferrals. 

In the week to July 17, 887 loans were restructured to interest-only terms, while 407 requested complete payment deferrals. 

Joel Oliver of SuperCity Mortgages said he had not received any referral requests since the first three weeks of lockdown. 

"I guess with the expiring loan holidays approaching, only then will we know if people need to continue or not, he said. "For the most part, for rental properties, once clients knew their tenants were not effected, then loan holidays were removed."

Oliver believes payment deferrals should be "closely monitored" to ensure only those who need it receive one.

"Some people could get use to not paying their mortgage and find it hard to adopt to the old spending lifestyle," he said.

While an extension of mortgage holidays will be welcomed by some struggling borrowers, advisers warn that clients must be aware of the consequences, with debt accumulating over the period leading to bigger loan balances.

Jeff Royle of iLender said complete deferrals were "in my view, the very last resort prior to considering selling".

He added: "Each borrower needs to seriously analyse their situation and discuss with professionals before making any decision." 

Royle said clients in difficult circumstances should consider extending the term of their loan, a move to interest-only, downsizing, and reviewing their long-term chances of recovery.

Tags: Grant Robertson Reserve Bank

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 ▼2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.15 3.29 ▼3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac ▼3.39 3.45 ▼2.99 ▼3.35
SBS Bank 4.54 3.09 3.19 3.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.59 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.99
The Co-operative Bank - Standard 4.40 3.05 3.19 3.49
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 3.65 3.69 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.12 3.19 3.17

Last updated: 4 August 2020 11:33am

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