Reserve Bank considering extending mortgage holidays

by Roxanne Libatique31 Jul 2020

Finance Minister Grant Robertson has confirmed that the Reserve Bank of New Zealand (RBNZ) is considering extending mortgage holidays as borrowers are still struggling to recover from the impacts of the COVID-19 pandemic.

On March 24, the government, RBNZ, and banks announced six-month principal and interest payment holidays for mortgage holders and small to medium-sized enterprises (SMEs) that were impacted by the pandemic. They are set to end in September, but the RBNZ believes it is “justifiable” to extend mortgage holidays to support customers further.

“The advice that I've had from the Reserve Bank is that they are considering looking at the extension of the mortgage deferral schemes – of the support that they give to enable the banks to provide those schemes – and I think judging from the conversations I've had with trading banks, that would be justified,” Robertson told Stuff.

Read more: Realtor owner calls for mortgage holiday extension

Industry experts seem to agree with the central bank's decision, with Century 21 New Zealand owner Derryn Mayne calling for an extension as the general election and the end of the extended wage subsidy are set to transpire in September.

“New Zealand real estate is facing a triple whammy in September, which will be detrimental to house prices and industry activity unless the government steps in,” Mayne said. “Having supported over 1.7 million jobs, the hugely successful wage subsidy scheme comes to an end on September 01.”

“We have a general election on September 19, which always sees real estate activity slow, then on September 24, the mortgage holiday scheme is due to expire. This could be a spring of discontent for thousands of Kiwis, but it doesn't have to be.”

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