Mortgages

Mortgage holidays set for extension

Minister of Finance Grant Robertson says the Reserve Bank could extend mortgage holidays for struggling borrowers.

Wednesday, July 29th 2020

Finance Minister Grant Robertson

The finance minister believes extending mortgage holidays to help hard-up home loan customers would be "justified", as speculation grows the Reserve Bank will extend the original scheme, due to expire in September.

During the Covid-19 lockdown in March, the Reserve Bank, government and retail banks agreed a support package to grant payment deferrals or shifts to interest-only for six months, to help hard-up households.

As the six-month period nears its end, politicians are keen to avoid a spate of home loan defaults and are reviewing further breaks for those who have lost their jobs.

Robertson told Stuff: “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."

It comes as data shows borrowers are still requesting payment deferrals.

In the week to July 17, 887 loans were restructured to interest-only terms, while 407 requested complete payment deferrals.

While an extension of mortgage holidays will be welcomed by some struggling borrowers, advisers warn that clients must be aware of the consequences, with debt accumulating over the period leading to bigger loan balances.

Jeff Royle of iLender said complete deferrals were "in my view, the very last resort prior to considering selling".

He added: "Each borrower needs to seriously analyse their situation and discuss with professionals before making any decision."

Royle said clients in difficult circumstances should consider extending the term of their loan, a move to interest-only, downsizing, and reviewing their long-term chances of recovery.

However, landlords.co.nz understands that many residential property investors have done their best to avoid taking up a mortgage deferral.

In a survey of investors that we ran in May, a mere 6.57% of the respondents said they were planning to take a “mortgage holiday” for their investment properties.

Read more:

COMMENT: Extend mortgage holidays

Investors expect road ahead to be tougher

Comments

No comments yet

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
Wairarapa Building Society 7.15
BNZ - Classic 7.24
TSB Special 7.24
ASB Bank 7.24
ANZ Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.