The Australian Banking Association (ABA) has announced a new phase of support to assist customers to get back to making their loan repayments. With the six-month loan repayment deferral period set to end on 30 September, the ABA said customers with reduced incomes due to COVID-19 will be eligible to apply for an extension of their deferral for up to four months.
A deferral extension of up to four months will not be automatic. It will only be provided to those who genuinely need some extra time. Bank customers with reduced incomes and ongoing financial difficulty due to COVID-19 will be contacted as they approach the end of their initial deferral period. Wherever possible, borrowers are expected to return to a repayment schedule through a restructure or variation to their loan.
ABA CEO Anna Bligh said many customers may need less than four months to either restructure their loan or get back into full repayments. Banks will work with customers to find the best options to restructure or vary their loan. Options may include: extending the length of the loan; converting to interest only payments for a period of time; consolidating debt; or a combination of these and other measures.
While over 800,000 borrowers have deferred their repayments throughout the COVID-19 crisis, "many customers have already chosen to resume making repayments", Ms Bligh said.
If, during or at the end of any deferral, customers continue to be severely financially impacted and are unable to make repayments, Ms Bligh said they will be assisted through their bank's hardship process to determine the best long-term solution for their circumstances.