Mortgage payments back on track

The number of ANZ mortgage customers making both principal and interest repayments is almost back to where it was before the arrival of the COVID-19 pandemic.

Ben Kelleher, ANZ NZ Managing Director, Personal Banking, said “89 per cent of our home loan customers are making both principal and interest payments on at least one home loan”.

In February 2020, 90.6 per cent of mortgage customers who had a home loan were making principal and interest payments.

That figure dropped sharply to about 80 per cent the following month, after the arrival of the pandemic.

“A number of customers sought help with their loans,” Mr Kelleher said.

“They either deferred repayments for a period, or switched to interest-only payments in 2020.

“The good news is that we have since seen a steady increase in the number of our customers who are making both principal and interest repayments - it is heading back to pre-COVID levels.

“It’s a reflection of the relative strength the economy has shown over the past year.”

"We have since seen a steady increase in the number of our customers who are making both principal and interest repayments. It is heading back to pre-COVID levels."

Ben Kelleher, ANZ NZ Managing Director, Personal Banking

Currently, about 27 per cent of ANZ’s mortgage lending to residential investors is interest-only, which accounts for 12 per cent of total residential lending.

That compares to 28 per cent prior to the COVID-19 pandemic, and 31 per cent as New Zealand came out of its first lockdown in May 2020.

The unemployment rate now looks like peaking at a much lower rate than expected, according to ANZ Chief Economist Sharon Zollner.

“The unemployment rate is key driver of people having trouble paying their mortgage,” she said.

ANZ gave repayment deferrals to about 16,500 home loan and personal loan customers after New Zealand went into lockdown in March 2020.

All of those customers have resumed payments.

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“We have been regularly checking in with our customers to see how they are doing” Mr Kelleher said.

“We talk to them about all the options, such as extending the loan term or switching to interest-only repayments.”

Mr Kelleher said this period of low interest rates is a great opportunity for borrowers to think about paying down their personal or home loan debt.

“So we are encouraging people to do this where it makes sense for them.”

“It’s great to see people building a buffer in case of unexpected events.”

“With house prices so high, households are taking on a lot of debt to get a foot on the housing ladder.

“Whether your mortgage is huge or small, new or decades old, it’s a great idea to use this period of low interest rates to make inroads on the principal.”