Banks launch mortgage holidays, but they "may not be for everyone"

by Ksenia Stepanova30 Mar 2020

The six month mortgage holiday agreed on by banks and the government has kicked off, with all major banks now offering principal and interest payment deferrals.

ANZ has released its mortgage holiday application form to homeowners, and other banks are in the process of creating the application system.

Kiwibank, ASB, and BNZ are offering a number of options including an extension of a customer’s home loan term, interest-only payments and repayment deferral. This can last for up to six months, and the customer can choose to end it early if their circumstances change.

Westpac is in the process of creating an online form for customers wanting to defer payments, which is expected to be available sometime this week. Westpac’s general manager of consumer banking and wealth Gina Dellabarca says customers should think carefully about whether they need this form of assistance, and urged them to get in touch with Westpac’s contact centre for a detailed explanation of what it would mean for their home loan.

“Customers shouldn’t be concerned about missing out if they need this support,” Dellabarca said. “If you don’t have a payment coming out in the next few days then we encourage you to hold off and wait for the electronic form which will provide a simple, streamlined way to get this done.”

Bankers Association chief executive Roger Beaumont warned anyone thinking of taking the mortgage holiday to carefully consider its costs, as interest would still accrue over the six months.

“While there are obvious advantages for people in need, repayment deferrals may extend the time it takes to repay the loan and will add interest cost,” he stated. “So it may not be for everyone.”

“Banks will have different approaches to how they manage the process for customers to opt into a mortgage deferral,” he added. “Those details, including eligibility criteria, will be available on bank websites.”

Most Read

NZ Adviser TV