The Australian Bankers Association (ABA) announced that banks may extend the six-month loan deferral scheme by another four months for customers with “reduced incomes and ongoing financial difficulty due to COVID-19.”
The loan deferral scheme was introduced in March and allows borrowers to pause their mortgage payments while they deal with the financial impact of the coronavirus pandemic. As customers approach the end of the deferral period, banks will implement what ABA called a “new phase of support to assist customers to get back to making their repayments.”
“Those who are able to repay their loans will resume doing so, which is in the best interests of those customers and allows support to be directed to those who need it. Encouragingly, many customers have already chosen to resume making repayments” said Anna Bligh, chief executive officer of ABA.
Customers with reduced incomes, however, will be contacted as they approach the end of their deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan.
“If these arrangements are not in place at the end of a six-month deferral, customers will be eligible for an extension of their deferral for up to four months,” ABA said in a statement. “Customers will be expected to work with their bank, during this extra time, to find the best solution for them.”
ABA cautioned that a deferral extension will “not be automatic, [and] it will be provided to those who genuinely need some extra time.”
“Many customers may need less than four months to either restructure their loan or get back into full repayments,” ABA said.