Will the bank force you to sell your home?

800,000 borrowers have deferred loan repayments in response to the economic fallout from the COVID-19 pandemic.  JobKeeper payments are set to reduce in September and by the end of March 2021, mortgage repayment holidays must stop.

What happens to borrowers then? Already one ANZ exec has said foreclosures could a reality for those unable to make repayments.

Crunch time is approaching so the corporate regulator, ASIC, has issued guidance to the banks on how to handle such loans.

ASIC is clearly expecting lenders to treat borrowers fairly.  Sitting atop its list is the expectation that lenders make “reasonable efforts” to contact customers before their deferral expires.  Many Origin clients tell us the banks are now contacting them to see whether they can resume making loan repayments.

When a lender determines borrowers need further help, its processes should be flexible enough to allow for tailored assistance to meet the needs of the consumer. But, if the bank can’t help, it must remind the borrower they have the right to complain to the Australian Financial Complaints Authority (AFCA).

Thankfully, many Australians are getting back on top of their mortgage.  CBA’s chief executive believes most people on a mortgage holiday could get back to making repayments soon.

Commonwealth Bank had 154,000 customers request their mortgage be deferred at the peak of the coronavirus pandemic in March. Since then, 19,000 have resumed making full loan repayments.

About a quarter of the 135,000 still on a mortgage holiday are making partial repayments.

In fact, only 12 per cent of them are believed to be in a higher risk category.   If that’s you, what do you do?

Origin brokers know which banks will lend to which borrowers – so its worthwhile chatting to Origin about your needs.  Just because your own bank may not treat you flexibly, does not mean all banks are like that.

Choice gave the Big Four a mixed scorecard for how fairly they had responded to Covid-19 – but there was no word on the smaller lenders.

Modelling on the impact of opting out for the now-available 10 months repayment holiday – shows it will add $9, 769 to a loan with a balance of $400,000 and a 30-year term. 

It may be now is the time to your Origin broker about looking at other lenders

Graeme Salt is a leader of The Futurus Group whose brands primarily comprise Origin Finance, Chan & Naylor Finance as well as Walker & Miller Training.

For a no-obligations consultation on your home loan needs, please contact Graeme on 02 9922 5055