Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

New Zealand mortgage deferral scheme extended till March

New Zealand mortgage

The scheme, due to expire in September, has been extended amid the recent outbreak in Auckland

The Reserve Bank of New Zealand (RBNZ) has confirmed the mortgage deferral scheme will be extended until March next year following the second lockdown in Auckland.

The scheme was due to expire on September 27, but has been extended by more than six months amid the return of Covid-19 to the community and recent outbreak in Auckland.

The extension applies to borrowers already on the scheme, and new applicants.

Deputy governor Geoff Bascand confirmed the central bank had given guidance to allow lenders to offer temporary deferrals, “without those loans being viewed in default”.

The extended scheme runs to March 31 next year.

After the scheme ends, banks will still be allowed to offer deferrals to borrowers, but those loans “will not have the same concessionary regulatory treatment”, the RBNZ said.

Bascand called on lenders to consider borrowers’ long-term interests when reviewing deferral extensions and new requests.

For many borrowers, resuming, or continuing payments in some form will be the most suitable approach, rather than taking up a deferral of their loan payments. A deferral should not be the default setting and it will be up to individual lenders to decide whether to offer one to their customers, he said.

The central bank said lenders should consider “hardship arrangements” with customers, “where the lender considers there is little reasonable prospect that the borrower will be able to resume payments once the deferral ends”.

Banks have responded to the news.

Westpac GM for consumer banking and wealth Gina Dellabarca expects many customers to come off the original deferral scheme.

One in five home loan customers who sought this assistance have now resumed payments and we expect this number to grow. Many others will roll off support after six months and restart their repayments then, Dellabarca said.

However, for those customers on deferrals who require continued support, we will have a range of options available including extending the term of their loan and switching to interest-only payments, she added.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.