Virus myth busting: Shayne and Mark

Deferring a home loan

For many people, a mortgage is the biggest investment they’ll make in their lives. In these uncertain times, it can be extremely overwhelming to have to continue meeting minimum mortgage repayments. One of the measures released in ANZ’s relief package is the ability to defer mortgage payments for six months.

“I think the industry as a whole has had a great response in terms of allowing customers to defer their repayments on mortgages whilst this plays out,” says Mark.

“[For] a lot of cases, it's a three-month deferral - a check point. And if the world hasn't changed, it's likely to be a six-month deferral ultimately.”

However, Mark clarifies a deferral means the mortgage will be paid later rather than not at all.

“You are paying later so you continue to accrue interest on your loans but it gets capitalised into the principal amount… It [basically] adds six months on to the length of the loan.”

Financial hardship

Although deferring mortgage repayments will be enough to help many customers through this period, Mark and Shayne acknowledge there will be some customers who need extra help. Their main advice for those people is to reach out to the bank as soon as possible.

“We've got [hardship processes] that are well established in terms of talking to these customers, understanding their particular circumstances and coming up with an arrangement for them to get out of that,” says Mark.

He acknowledges that although, in some cases, the arrangements are not loved by customers, they are determined it’s in their best interest.

“What I mean by that is sometimes it’s in the best interests of a customer to sell the property that they're in, settle a large amount of debt and be left with capital at the end of it. They can get themselves back to employment or get themselves back to health and then get on with life with some money in the bank,” Mark explains.

“We've got teams in place that have these conversations day in, day out, because despite the environment now, people run into trouble at all times of the year.”

Negative interest rates

With interest rates at historical lows, some customers might be confused about what happens if they drop to – or below – zero.

“What we know is internationally there are quite a few countries around the world where they do experience negative interest rates,” says Shayne.

“However, the Reserve Bank of Australia (RBA) has made it very clear that they don't see that happening in Australia. And while you can never say never, they have pretty much ruled it out and said they've got lots of other options in terms of ways they can continue to stimulate the economy and get money flowing without having to resort to [negative rates].”

Shayne adds: “But the point about low rates is they're there for a reason. They're there hopefully to make borrowing cheaper, to make the cost of debt [lower] for businesses and mums and dads to remove that burden from them and hopefully encourage people to get out and invest when the time is right.”

The future

While no-one knows exactly how long COVID-19 will last, Shayne and Mark discuss the world’s changing reality beyond the pandemic.

Shayne says although the initial feeling of panic in the pandemic seems to have lulled, now is not the time to get complacent.

“This thing's going to continue to evolve and change,” he says. “People need to be a little bit cautious, not scared, but just a little bit cautious.”

They both agree that the best advice they can give customers is to keep speaking to the bank about any and all of their anxieties.