Covid-19 Home Loan Deferral Scheme Ends

What happens then?

Customers needing a loan repayment deferral will be assessed on the criteria we used before the RBNZ’s concessionary treatment was introduced.

Customers continue to have rights under consumer laws to ask for changes to their loan if they’re suffering unforeseen hardship, such as the loss of their job.

How does the RBNZ’s concessionary treatment work?

In March 2020 the Reserve Bank provided regulatory guidance that enabled banks to offer temporary mortgage deferrals to their customers without those loans being viewed as in hardship of behind in the customer’s credit checks.

How are we communicating the ending of LRDs to our customers?

All loans on an LRD are set up with a particular expiry date and customers are communicated with leading into that.

We’ve also published on our website that we’re not offering LRDs any longer from 1 March 2021 to meet the RBNZ’s guidance (that LRDs must end on or before 31 March 2021 to receive concessionary treatment.)

Why don’t you encourage more people to take loan deferrals?

Home loan deferrals are designed to help reduce customers’ outgoings by temporarily stopping home loan repayments for up to six months.

Loan deferrals – sometimes called mortgage holidays – will extend the life of the loan and add to the overall cost because interest will continue to accumulate while they aren’t paying, so we advise customers they might not be for everyone.

Once the concessionary period ends, deferrals will show on a customer’s credit check as the customer being behind in payments. This may impact a customer’s ability to get credit in future.

"As the impacts of Covid-19 on customers’ lives and the economy became clearer many chose to resume their usual loan payments."

Do you expect much demand for further deferrals?

We have other options available to customers who might be having difficulty paying their loan.

These also include further relief under our hardship assistance programme which could provide options for customers such as (but not limited to) a further break in payments, extending the loan maturity date to reduce the level payments (but increase the number of them), or move to interest-only loans for a period.

What happens to customers who are still unable to repay their loans?

We have a dedicated Customer Financial Wellbeing Team that helps customers find a way forward. The goal is to help customers to get back into a position where they can maintain their payments.

We do this by undertaking an assessment to fully understand their financial position in order to provide solutions with the least financial impact on customers.

The approach taken will vary depending on the customer and their individual circumstances.

What sort of things does the Customer Financial Wellbeing team do?

The team gets a full picture of the customer’s financial situation and explores how the customer can continue to make payments.

This may include encouraging our customers to seek independent advice, like financial mentoring, for further assistance on the way forward.

We also keep in close contact with the customer to ensure they’re able to stay on track with the agreed repayment strategies.

The team also ensure the customer is kept well informed so they understand what is required of them, and can plan accordingly.

Will you be selling the houses of people who can’t make their loan payments?

This is a last resort. Mortgagee sales are very rare and aren’t in the banks or customers interest, so we work with the customer to explore all other options.

If all other options fail, most home owners choose to sell their property to pay back their loan and protect their equity. The current housing market advantages the customer if they choose to sell their property.