The end of March signals the end of many policies that have provided financial assistance to millions of Australians since the height of the COVID-19 pandemic.
On 31 March, the mortgage repayments holidays announced as part of a $100 billion package from the big banks will officially come to an end.
For borrowers, it means repayments will have to recommence from this date, if they haven’t already and unless they have made other arrangements with their lender.
Most Australians are on track to repay their mortgage, with the number of deferred loans falling by more than 70 per cent since its peak, according to the Australian Banking Association (ABA).
But if you’re still struggling to meet repayments, all the big four banks have pledged ongoing assistance on a case-by-case basis.
Here’s what each of the banks have said, and what you can do:
More than three quarters of Westpac customers have already re-commenced repayments, a spokesperson said.
“Customers with ongoing financial challenges will receive tailored support on a case-by-case basis. We look at a range of options as part of this process, such as providing more time to get back to regular repayments.”
“Customers experiencing financial difficulty can access personalised support through our dedicated hardship assistance team.”
As of 10 February, the Commonwealth Bank has just 25,000 active home loan deferrals, down from a peak of 154,000.
It also has other assistance options available to customers, it stated.
“In addition to repayment deferrals, the bank has also sought to provide customers with other support measures, including a freeze on home loan forced sales for owner-occupiers and a new money management feature in the CommBank app – Coronavirus Money Plan.”
NAB still has a small number of customers who have extended their home loan deferrals, but this will cease by 31 March.
“While it is pleasing to see most of our customers have resumed repayments we know some customers will need our ongoing assistance,” said NAB Personal Banking group executive Rachel Slade.
NAB will continue to support customers “based on their individual circumstances” through reduced loan repayments, payment “moratoriums”, career skills support and access to financial counsellors, she added.
“We ask any customers who are struggling financially to contact us as soon as possible so we can help them get to the other side in the best position possible.”
ANZ stopped taking applications for new deferrals on 31 January, but said it would continue to provide assistance to customers.
“We continue to support our customers on existing deferrals and will work with them on a range of other options should they require support beyond March,” a spokesperson said.
“There are a number of options for those who are still experiencing difficulty, whether COVID-related or not. These include restructuring their lending to reduce repayments, partial payments or short-term repayment pauses.
“When entering into payment arrangements with customers we seek to make sure they are sustainable and realistic.”
What can I do if I can’t make repayments?
If you’re still in a dire financial situation, you’re not alone, said comparison site Mozo spokesperson Tom Godfrey.
"The harsh reality is that large numbers of borrowers are still not in a position to be able to afford their mortgage repayments," he said.
The first step to do is to reach out to your bank.
“If you’re in this sticky situation, it’s vital that you think through your options and get on the phone to your lender to sort out a plan sooner rather than later,” Godfrey said.
“From extending your mortgage holiday to offering you a lower interest rate or switching to interest only, there will be steps you can take to reduce the financial stress you are under.”
It’s in the bank’s interest for your mortgage not to default – so the best thing to do is be one step ahead, and put a plan in place before the repayments come due.
Ask for a better interest rate. Interest rates are at all-time lows – so take advantage of it.
“If you’re paying anywhere near the average home loan rate of 3.29 per cent, refinancing to a better interest rate is worth looking at,” said Godfrey.
Aussies who refinance from the average big four bank variable rate to the best rate in the market, 1.99 per cent, can save more than $4,000 a year, he said.
Reduce your monthly repayments. If you can’t refinance, look at moving from principal and interest repayments to interest-only repayments.
“This strategy could reduce repayments by $4,000 over six months on a typical $400,000 home loan,” Godfrey said.
Defer payments for another six months. If you’re really in a tough spot, deferring payments for longer may be your best option.
It does mean, however, that you will have to pay more interest over the life of the loan, but you will win some extra time to get back on your feet in the short-term, said Godfrey.
Lengthen the loan. This should be your last option, and means stretching out a 25-year loan to 30 years, for example.
“This option will reduce your monthly repayments by spreading them over a longer time period.”
Whatever you do, be conscious of whether it's adding to the size of your loan, Godfrey warned.
"It’s really important that you look at the long term implications of your choice. You want to try and avoid adding tens of thousands of dollars worth of interest onto your loan so when it comes to things like moving to interest only payments it’s best looked at as a short term strategy to tide you through a tough time."