“This means that any customer making full mortgage repayments in the 12 months prior to entering a home loan deferral will be able to remain in their home until September 2021, even if they are now struggling to get back to making repayments, where they agree to work with us.”
CBA sent a three-page document to the FCA to distribute to its financial counsellors, outlining which customers are eligible and urging concerned customers to contact their banks.
Ms Guthrie said the mortarium was a “terrific” development that will give borrowers “peace of mind”.
“Obviously it’s not for everyone, if you were struggling before COVID that group of people will need a different sort of support,” Ms Guthrie said. “But for this group, who were entirely up to date pre-COVID and might be in an industry where it’s been harder to get a job, they just need more time. I think this will take away a lot of stress.”
Ms Guthrie said she was surprised by the move, and had expected the government would have to intervene to prevent the banks foreclosing on borrowers.
“The banking royal commission has made banks and investors wake up to the fact they need to think about the long term and not short-term profits,” she said.
The banking industry has been proactive in offering customers struggling during the pandemic deferrals on mortgage or small business loan payments. All major banks have hired additional staff to reach out to customers to encourage full or partial repayments, with between 20 and 30 per cent of customers now starting to make repayments.
Latest figures from September showed the total number of CBA loans on deferral was around 129,000 with total balances at $42 billion, down from 210,000 loans worth $67 billion in June. CBA is set to update the market on the progress of its deferrals next Wednesday.
Australian Bankers’ Association chief executive Anna Bligh said each customers’ circumstances were different and banks were working through loans on a case-by-case basis.
“All banks will be working to avoid foreclosures wherever possible and meet ASIC’s stated expectation for lenders to make all reasonable efforts to work with consumers to keep them in their homes if that is in their best interests.”
NAB said it will provide customers with support tailored to individual needs but stopped short of promising to avoid foreclosures. Westpac and ANZ, did not respond to requests for comment.
Charlotte is a reporter for The Age.