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Borrowers in difficulty need to deal with it early

FSCL expects increasing number of mortgage complaints.

Tuesday, May 17th 2022, 10:00AM

by Eric Frykberg

Borrowers are being urged to take prompt action if they are struggling to keep up with loan repayments, according to Financial Services Complaints Limited (FSCL).

The comments come as the credit monitoring company Centrix reports a 5% rise in loan arrears in the last year.

“We have seen an increase in lending complaints of 70% in the last year and a marked increase of 120% in complaints about unsecured debt over the same period,” FSCL chief executive Susan Taylor said.

She said all lenders are required to have a hardship policy under the Credit Contracts and Consumer Finance Act (CCCFA) as well as the Responsible Lending Code.

The code required lenders to explain their processes regarding repayment difficulties to borrowers.

“For example, a borrower might call their lender to tell them that they have unexpectedly lost their job and are struggling to meet their repayments.,” Taylor said.

“The lender should remind them that they can apply for changes to the repayment amount or credit agreement, tell them what information the lender needs to assess the application and any time limits that might apply.”

She cited a case in which a man fell into arrears on a personal loan after his partner became sick and could no longer work.

He was able to sustain his regular payments but not clear a backlog. So his lender consolidated both into a single fund, and extended the term of the loan, which proved workable.

Taylor added that if a lender is trying to contact a person in arrears on a loan, then it is far better to have that conversation earlier, rather than later, even if it is a hard thing to do.

With inflation rising, Taylor said she expected to see an increase in complaints in the coming months.

This happened during the Global Financial Crisis and was likely to happen again.

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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 5.95 6.40 6.59
ANZ Blueprint to Build - - - -
ANZ Special - 5.35 5.80 5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - 5.35 5.69 5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 5.95 6.29 6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 ▲5.35 ▲5.85 -
Heartland Bank - Online 4.10 ▲4.90 ▲5.29 ▲5.59
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 ▲5.35 ▲5.80 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 5.55 6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank ▲6.30 ▲5.65 5.79 ▲6.45
TSB Special ▲5.50 ▲4.85 4.99 ▲5.65
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.87 5.35 5.72 5.99

Last updated: 29 June 2022 9:23am

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