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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, 9:22AM

by The Landlord

Finance Minister Grant Robertson

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.

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.

However, landlords.co.nz understands that many residential property investors have done their best to avoid taking up a mortgage deferral.

In a survey of investors that we ran in May, a mere 6.57% of the respondents said they were planning to take a “mortgage holiday” for their investment properties.

Read more:

COMMENT: Extend mortgage holidays

Investors expect road ahead to be tougher

Tags: banks coronavirus Covid-19 Grant Robertson housing market investment landlords Lending mortgages property investment real estate

« Servicing tests hinder home loan marketANZ eases servicing test »

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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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