When mortgage holders choose to defer

by Madison Utley24 Mar 2020

APRA has clarified its regulatory approach to the COVID-19 support packages being offered to both small business and home loan borrowers which allow for repayments to be deferred for up to six months.

For borrowers who choose to take up the offer, but have otherwise been meeting their repayment obligations until recently, lenders do not need to treat the period of the repayment holiday as a period of arrears.

Further, loans that have been granted a repayment deferral as part of a COVID-19 support package need not be regarded as restructured.

All authorised deposit-taking institutions (ADIs) will be receiving direct correspondence from APRA advising them of the specific reporting treatment for relevant loans. The ADIs will be required to report to the regulator and make public the nature and terms of all repayment deferrals and the volume of loans to which they are applied.

ADIs must also continue to provision for these loans under relevant accounting standards.

Aussie Home Loans CEO James Symond has been among those to welcome the provisions being made for home loan customers in these uncertain times. 

“I applaud the move of the banks and government to provide welcome relief to eligible customers, who may face uncertainty in their job and business security,” he said.

“The breathing room provided by a repayment pause could prompt borrowers facing hardship to check their financial position and develop a long-term strategy through the next six months.

“Aussie brokers will continue to help customers navigate this ever-changing environment and provide assistance to help them take advantage of initiatives such as a repayment pause, based on individual customer needs and circumstances,” Symond concluded.