Banks begin contacting customers for 6-month loan assessments

Of the more than 900,000 loans that have been deferred across the pandemic, at least 450,000 loan deferral customers will be assessed in coming weeks as they approach the end of their deferral in September and October, the Australian Banking Association has confirmed.  

These include 105,000 business loan deferrals to small and medium businesses, of which 65,000 will be assessed by the end of September, and 40,000 by the end of October. Around 260,000 mortgages are also due to be assessed, 80,000 by end of September and 180,000 by end of October. 

“The loan deferral measure offered to customers by Australia’s banks has led to the largest ever customer contact process in the industry’s history, with an additional 5,000 new or redeployed staff working to ensure customers understand their options," ABA CEO Anna Bligh said. 

The next steps presented to customers during these assessment calls will include: 

• Those who can resume repayments at the end of their deferral, will be required to do so;
• Those still in difficulty will work with their bank to restructure or vary their loan, including converting to interest only payments for a period of time, or extending the term of the loan;
• Following the assessment once the bank understands the customers circumstances, in some cases, a further four-month deferral may be granted, but this will not be automatic; and
• Customers who will be unable to pay their loan over the longer term will be offered tailored assistance that addresses their needs.

“Customers know what’s best for them. It’s the bank’s job to set out all the options and implications and ensure customers have the information and the time to make the right decision to suit their needs,” said Ms Bligh.   

Of the 900,000 loans that have had payments deferred, 13 per cent had already resumed repayments by the end of July. Some banks have estimated that an additional 100,000 people began resuming payments in the month of August.  

 “As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it," Ms Bligh continued.

COVID deferrals: Facts and figures – as at July 31 2020

• In July, 81,000 deferred loans, worth $22.4 billion, resumed repayments.  
• By the end of July, 109,000 loan deferrals worth $41 billion had resumed repayments (around one in seven of total deferrals). 
• Overall, more than double the amount of deferred mortgages have resumed repayments (80,000) than deferred small business loans (38,000). 
• One in five of all remaining outstanding loans were receiving full (13 per cent) or partial (7 per cent) repayments. 
• Of remaining outstanding small business loans, one in five (22 per cent) were making full repayments and one in 20 (5 per cent) making partial repayments. 
• Customers with deferred mortgages are also continuing to make full (11 per cent) or partial (9 per cent) repayments.