How banks are helping clients impacted by COVID-19

The major banks have outlined support measures for consumers and business affected by the coronavirus outbreak.

The Reserve Bank of Australia (RBA) last week has cut their cash rate by 0.25 per cent taking it to a new historical low of 0.50 per cent.

19th March Update – The RBA has dropped the cash rate another 25 basis points from 0.50% to 0.25% in response to the coronavirus impacts. Stay tuned as we update this page as well as our post on which lenders will be passing on the rate cuts of March 2020.

Lenders have been quite supportive by passing on the full 0.25 per cent cut from the Reserve Bank of Australia during these tumultuous times. This unprecedented event has impacted both businesses and homeowners.

The big 4 banks are the first to provide guidance and outlined other measures to support affected customers amid reports that some European Banks have suspended mortgage repayments for borrowers directly impacted by COVID-19[1]. Banks in Australia have followed suit to help with their customers.    

ANZ

ANZ has also committed to providing support to customers and businesses affected by the coronavirus outbreak.

Home Loan & Business customers

• ANZ has passed on the full rate cut of 0.25 per cent to their retail clients
• ANZ will continue to process home loan applications
• Customers can access and transact on their accounts 24 hours a day through Westpac Online Banking to access their accounts 24 hours 7 days a week.
• Additional access to credit (subject to approval)
• Early access to term deposit without break fee.

Commonwealth Bank of Australia[2]

Home Loan customers

• CBA is dedicated to give access to their customer by having their branches of over 900 branches to remain open for business and to assist with customers that are not familiar with digital banking.
• Customers can access their accounts 24 hours a day through NetBank or the CommBank App and provide updates to customers including through the CommBank App.
• CBA will continue to process home loan applications and reduce their home loan rates by 0.25 per cent.
• Customers who may be facing hardship due to impacts of the virus can contact the Financial Assistance Team for assistance such as hardship options including deferral of loan repayments.

Small and medium business customers

• CBA is reducing rates on business loans by 0.25 per cent.
• Provide additional resources and extended hours for commercial lending teams to process business loan applications.
• Providing a range of support measures to our impacted business customers by deferring repayments and waiving fees.
• Deferring repayments on a variety of business loan and overdraft products, for 90 days.
• Deferring repayments on vehicle and equipment finance loans and providing tailored restructuring options that meet individual customer needs.
• Waiving establishment fees and excess interest on Temporary Excess products.
• Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts).
• Waiving merchant terminal fees for impacted customers with CBA payment terminals, for 90 days.
• Paying Australian suppliers faster

Mr Comyn said, “Commonwealth Bank’s strong financial position means Australians can have confidence in our ability to support the economy in this period of difficulty, through to a time of recovery.”

March 19th update

Home Loan customers

• CBA has reduced their one, two and three-year owners-occupied P&I home loans by 70 basis points to 2.29 per cent. This is for both new and existing customers and is effective from 1st May 2020.
• CBA is also automatically reducing repayments for all variable P&I home loan accounts to the minimum required within the borrower’s loan contract. This is effective from 1 May and borrowers will have the opportunity to opt out if they wish to retain their current principal repayment levels.

Small and medium business customers

• Reduce rates on business loans by 100 bps, in addition to the 25 bps reduction announced on 3 March, effective 3 April;
• Participate in the RBA’s new term funding facility, aimed at providing low-cost credit to businesses; and
• Continue to offer a range of measures to provide further assistance to customers facing financial hardship.

“These are unprecedented times, and they call for unprecedented measures. We recognise that this is a very concerning time for our customers and the community. We are focused on delivering the best possible service to all of our customers and supporting the Australian economy.

Following [the]reduction in the official cash rate by 25bps we are taking deliberate steps to further support parts of the economy most in need. In particular, we want to ensure that we help keep small businesses open so that they can keep Australians employed, and that we do everything we can to support households and older Australians.

We understand the ongoing uncertainty as the nation responds to the challenges posed by the coronavirus. Australia has a strong financial system and economy, and we stand ready to support our customers, our people, our suppliers and the economy at this time.” – CBA CEO Matt Comyn

ME Bank

Home Loan Repayment Holiday/Pause:
The option to pause home loan repayments for up to six months, with a review at three months.

How does pausing my home loan work?

• For home loan customers impacted by COVID-19 and the current economic uncertainty, ME has introduced a repayment pause for home loan customers.
• Customers will not need to make repayments for up to six months, with a review at three months.
• Interest and charges will continue to accrue during the repayment pause.

What is the process to request a repayment pause?

• Customers will need to contact our call centre to action a repayment pause on 13 15 63
• ME bank will check in with the customer after 3 months to determine if the repayment pause needs to continue. If yes, we will continue for another 3 months.

What if a customer needs a repayment pause for longer than 6 months?

• These customers will be assessed on a case by case basis by our Customer Assist team.

Will customers accrue interest during the pause?

• Yes, interest and charges are accrued during the repayment pause.
• Accrued interest will be capitalised and added to the customer’s home loan balance and repayments will be adjusted.
• These future payments may be higher.

Is there an option to extend the loan term at the end of the repayment pause period (instead of increasing repayments)?

• This option is currently not available.

Does a repayment pause affect a customer’s credit rating?

• This is yet to be decided at an industry level.

Does it matter what type of home loan a customer has?

• Repayment pauses will apply to all home loans except construction loans. This includes fixed rate loans.
• Our call centre will review construction loans on a case by case basis due to the complications around ongoing funding.

Does this apply to interest only loans, or loans for investment properties?

• Yes, the repayment pause can apply to loans for investment properties and interest only loans.

Will ME be offering any relief for customers with credit card or personal loan debts?

• Yes, ME will provide support for customers experiencing financial hardship. Customers will need to speak to our First Contact team to determine whether they are eligible for any support.

National Australia Bank [3]

Home Loan customers

• NAB has passed on the full rate cut of 0.25 per cent to their retail clients
• NAB will continue to process home loan applications
• Customers can access and transaction on their accounts 24 hours a day through NAB Online Banking portal to access their accounts 24 hours 7 days a week.

Small and Medium business customers

NAB is playing their part in assisting their customers in these uncertain times by offering support services which may include the suspension of repayments or interest, a reduction of the loan amount or the waiving of fees.

NAB has announced measures that primarily focuses on business customer facing cash flow challenges, which include:

• Deferral of business loan repayments for up to three months
• Extension of a business loan term by a period of up to three months, where individual circumstances warrant
• Support to restructure existing business loans, including equipment finance
• Business credit card deferred repayments.

“We work with all our customers on a case-by-case basis and encourage any customer experiencing hardship – regardless of the circumstances – to contact us to see how we can better support them,” a NAB spokesperson told Mortgage Business.

March 19th update

NAB to freeze repayments for distressed mortgage customers.

St George Bank

Meanwhile, St George Bank has introduced support measures to assist with the clients. 

Home Loan customers

• St George has passed on the full rate cut of 0.25 per cent to their retail clients
• St George will continue to process home loan applications
• Customers can access all their accounts through St George Internet Banking Portal
• Customers who may be facing hardship due to impacts of the virus can contact the Financial Hardship assistance team to discuss potential deferral in loan payment

Small and Medium business customers[6]

St George Bank continues support for the business customers impacted by the Coronavirus situation by providing the following support measures.

• Fee Free redraws
• Business loan deferred repayments up to 3 months
• Option to extend Business Loan term by up to 3 months
• Restructuring and consolidating loans
• Access to term deposit funds without reduction in interest rate
• Deferred Payments for Business Credit Cards
• Business Financial Counselling access
• Business credit card deferred repayments
• Merchant terminal rental fee waivers for up to 3 months

Westpac[4]

Meanwhile, Westpac has stated that its hardship assistance program would be available to affected customers.

Home Loan customers

• Westpac has passed on the full rate cut of 0.25 per cent to their retail clients
• Westpac will continue to process home loan applications
• Customers can access and transact on their accounts 24 hours a day through Westpac Online Banking to access their accounts 24 hours 7 days a week.
• Customers who may be facing hardship due to impacts of the virus can contact the Financial Hardship assistance team to discuss potential deferral in loan payment

Small and Medium business customers[5]

Westpac has announced their support to business impacted by COVID-19 by providing the following support measures.

• Fee Free redraws
• Business loan deferred repayments up to 3 months
• Option to extend Business Loan term by up to 3 months
• Restructuring and consolidating loans
• Access to term deposit funds without reduction in interest rate
• Deferred Payments for Business Credit Cards
• Business Financial Counselling access
• Business credit card deferred repayments

March 27th Update

Support for retail customers.

• Effective Friday 27 March 2020, we are making changes to Fixed Home Loans under the Premier Advantage Package*.
  • 1 year owner occupier Principal & Interest fixed rate^ home loan decreasing by 1.00% p.a. to 2.29% p.a. (comparison rate** 3.61% p.a.)
  • 2 year owner occupier Principal & Interest fixed rate^ home loan decreasing by 0.69% p.a. to 2.29% p.a. (comparison rate** 3.53% p.a.)
  • 3 year owner occupier Principal & Interest fixed rate^ home loan decreasing by 0.69% p.a. to 2.29% p.a. (comparison rate** 3.45% p.a.)
• Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 can contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review.
• Effective Friday 27 March 2020, we are introducing a Term Deposit special offer of 1.7% p.a. interest for 12 months for all Australians (up to $500,000 per customer). Available online and in-branch. For Australians aged 65 years and over the rate will be 2% p.a. for eight months (up to $500,000 per customer). Customers can choose to have interest paid monthly to provide them with regular income.
• We have also introduced a nationwide plan to help elderly customers access telephone and internet banking, including a specialist call centre available to help people register for and use telephone and online banking. 

Support for business customers.

• We have made a 200 basis point reduction on overdrafts for new and existing customers.
• We have made a 100 basis point interest rate reduction for small business cash-based loans.
• Small business customers with business balances less than $3m¹ experiencing cash flow issues as a result of COVID-19 can defer Principal & Interest repayments of business term loans and Equipment finance for six months.
• We also have merchant terminal rental fee waivers for up to three months. In addition, we are helping small and medium businesses take advantage of the increased instant asset write-off and accelerated depreciation provisions in the Federal Government stimulus package with no establishment fees for equipment finance loans until the end of June 2020.  

“We encourage any customer with concerns about their loans and repayments to talk to us so we can provide support…Westpac has a dedicated hardship assistance program to help customers experiencing financial stress, including deferring repayments.”

Other alternate short-term solutions you can consider

• Revisit your existing living expenses to see what discretionary expenses you can temporarily suspend or stop such as gym memberships, brunches etc.
• Consolidate your debts such as credit cards, personal loans and car loans into your home loan. This will help reduce your monthly repayments because home loans typically have a lower interest rate and a longer term loan.
• Ask your existing lender to sharpen your interest rate. This can be done quick and easy. If you are unsure, speak to your mortgage broker for more assistance.
• Refinance your existing home loan to another lender that is offering a lower interest rate and reset your term loan back to 30 years. This will help reduce your monthly repayment (subject to lenders approval).
• Switch your monthly repayment from principal and interest to interest only.
• Speak to your lender regarding financial hardship or assistance. Most lenders will allow you to defer to your home loan repayments for up to 3 months depending on the lender. Your mortgage broker can help with this inquiry.

We are here to help and if you want to talk to us about your finances, you can submit your inquiry using our form (https://rateseeker.com.au/qualify/)

 

References

[1] https://www.bbc.com/news/business-51817947

[2] https://www.commbank.com.au/guidance/newsroom/business-eap-202003.html

[3] https://news.nab.com.au/coronavirus-response/

[4] https://www.westpac.com.au/help/disaster-relief/coronavirus/

[5] https://www.westpac.com.au/help/disaster-relief/coronavirus/

[6] https://www.stgeorge.com.au/about/sustainability-and-community/disaster-relief