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Commonwealth Bank has seen an increase in requests for home loan repayment deferrals as COVID-19 lockdowns continue, but not a deluge of them, the bank said.
Angus Sullivan, CBA’s head of retail banking, told The Australian that while the lockdowns will negatively affect economic output, it’s still too early to worry about another recession.
“Obviously, it’s a negative,” he said. “Whether we go into a recession or not, I think it’s probably too early to tell. We need to see where the numbers go over the next week or two. Clearly, the next couple of weeks are going to be critical, and we’re doing our best to make sure we’re prepared for either scenario, and giving as much support to customers as we can who need it.”
Sullivan told The Australian that the bank had communicated with more than a million customers about support measures, and about 30,000 people had visited CBA’s support web page. He said that so far during the current outbreak, only a couple of thousand CBA customers had chosen to defer their loan repayments, with more than half of the requests coming from New South Wales and the remainder from Victoria.
“There’s a decent chunk of people that are just finding out more about what’s available,” Sullivan said. “…It’s still a relatively modest number of people [requesting deferrals] if you think back to the deferrals that we put in place last year. When we went into the first round of very large lockdowns, we did about 158,000.”
This time, CBA is not extending the loan term for customers who defer repayments, The Australian reported. That means when payments resume, they will be higher.
Last week, APRA threw its support behind banks offering support to lockdown-affected borrowers. Banks will not be required to treat deferred payments as arrears or a restructuring.
At the height of the pandemic last year, business and home loans on deferral peaked at about 896,000 – or about $266 billion, The Australian reported. By March, that number had shrunk to $14 billion in loans.
Ross McEwan, chief executive of National Australia Bank, told The Australian that NAB had also seen a rise in customers seeking assistance or loan deferrals.
“The longer the lockdowns go, obviously, the more people it impacts, and their financial buffers start to get hit,” he said.
Ryan Smith is currently an executive editor at Key Media, where he started as a journalist in 2013. He has since he worked his way up to managing editor and is now an executive editor. He edits content for several B2B publications across the U.S., Canada, Australia, and New Zealand. He also writes feature content for trade publications for the insurance and mortgage industries.
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