The government has announced a six month mortgage holiday for homeowners in financial hardship, and a financial support package for businesses affected by the economic downturn.
All major retail banks have agreed on a six month principal and interest payment holiday for those with a mortgage, and for SME customers who are facing tough times are a result of the COVID-19 outbreak.
The government and the banks will also kickstart a $6.25 billion Business Finance Guarantee Scheme for SMEs to protect jobs and support the economy.
Finance Minister Grant Robertson says the measures will protect homeowners from having their homes repossessed if they are unable to make payments.
“These actions between the Government, banks and the Reserve Bank show how we are all uniting against COVID-19,” Robertson told a press conference.
“A six-month mortgage holiday for people whose incomes have been affected by COVID-19 will mean people won’t lose their homes as a result of the economic disruption caused by this virus.’
The details of the measures are still being finalised, and are expected to be made public over the next few days.
The Business Finance Guarantee Scheme will offer short-term credit to soften the blow of any lost revenue for small and medium businesses, and will include a limit of $500,000 per loan. It will be offered to firms with a turnover of between $250,000 and $80 million per annum.
The government will shoulder 80% of the risk, and says it expects banks to offer these loans at a “fair, transparent rate.”
Reserve Bank Governor Adrian Orr once again assured the public that New Zealand’s banks are well capitalised and liquid, and will be able to offer loans to help businesses through the tough times.
“[The banks’] ability to extend credit to firms to bridge the difficult times created by COVID-19 is critical and made more possible with today’s announcements,’ Orr said. “We will monitor banks’ behaviour over coming months to assess the effectiveness of the risk-sharing scheme.”