Since announcing they would freeze customers' mortgage repayments due to hardship, Australian banks and lenders have faced a flurry of applications.
Westpac CEO Peter King revealed last week Australia's second-largest bank had received more than 100,000 hardship requests alone, while all have had to hire hundreds of call centre staff to deal with the influx of requests for help.
A decision appears to also have been made by the vast majority of lenders to report customers as up to date with their repayments regardless, or not report at all for the period, so as to protect consumer credit reports.
The country's banks and lenders have opened up the floodgates to customers wanting to freeze their mortgage repayments, and Australians have responded.
Hundreds of thousands of them have applied to the major banks alone for mortgage relief, as the big four put on extra call centre staff as they're inundated with hardship applications. A cursory search of employment websites like Seek for example, turn up hundreds of job ads seeking additional online and phone customer service staff.
Even then they can hardly keep up with the enormous caseload, according to the country's peak credit body.
"Consumers are rightfully seeking hardship assistance and those conversations are being fast-tracked as quickly as possible right now," Australian Retail Credit Association (ARCA) CEO Mike Laing told Business Insider Australia. "Normally these requests can take days or potentially weeks for banks to resolve them. Now they're being pushed through in minutes as banks try to get on top of this."
"The primary focus of lenders right now is just trying to help the desperate people who have suddenly lost their jobs."
Newly appointed Westpac CEO Peter King told the ABC, Australia's second-largest bank alone has had more than 100,000 customers seeking hardship relief, with similar numbers expected across the Commonwealth Bank, ANZ, and NAB.
They along with other banks and lenders have been in weeks-long discussions over how unprecedented hardship measures will impact customers financially when all of this when the coronavirus outbreak is said and done.
Missed mortgage payments due to financial hardship should not affect your credit score
When a mortgage holder misses a payment, due to financial hardship, it will mean your future repayments are higher. Despite this, a mortgage holder shouldn't be hurt by a negative credit report, according to ARCA, which represents the majority of the banks and lenders in the country.
"We've surveyed most of the significant lenders in the market as well as the small fintechs, and everyone who responded said they'll either keep reporting customers are up to date with their repayments or cease reporting for those accounts which have put repayments on pause," Laing said.
"The main story is that no customers with a mainstream lender will be reported [to credit agencies] as having missed repayments."
It's an extraordinary agreement for troubling times. Under normal circumstances, any missed repayment would hurt your credit report, maintained to up to two years, and thus hurt your ability to borrow in the near future.
The reassurance also strikes a contrast to what a tight-lipped Australian Banking Association (ABA) was saying in March, with the organisation maintaining reporting was a legal obligation.
In light of the decision, customers struggling to get onto their lender also shouldn't feel anxious, Laing advised.
"Lenders are aware that some customers are finding it hard to get in touch. There are a large number of people seeking assistance at the same time. Don’t worry, you won’t be disadvantaged if you are delayed in making contact," he said.
"While you still need to advise your bank if you're struggling financially, they understand that some people can't get through. As long as you've made an effort to tell them, your lender can go back, put your account on pause and retrospectively fix a missed repayment on the system."
While it will help ease some of the financial burden customers are carrying, it won't solve all of their anxieties. As the coronavirus and the health restrictions put in place to stop its spread pushes Australians out of work and shuts down businesses, countless more will need a helping hand this year.