CBA urges distressed property investors to sell

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    Commonwealth Bank is urging property investors who are unable to repay their mortgages to consider taking advantage of the booming property market by selling.

    Selling investment properties is one of several options the bank is raising with under-pressure customers, according to a report by The Australian. The suggestion comes as Westpac prepares to end its COVID-19 support package for customers.

    The bank is also keeping an eye out for mortgage customers put in financial distress by the end of JobKeeper. The borrowers hit hardest by the pandemic are facing the end of the JobKeeper program and the expiration of mortgage payment deferrals within days of each other. However, CBA is confident it can guide its customers through any upcoming challenges, The Australian said.

    Customers employed in especially impacted sectors like travel and tourism are the focus of CBA’s efforts, group executive for retail banking Angus Sullivan told the paper.

    “We will see the formal conclusion of that deferral program come to an end, but by no means is that the conclusion of the work that we’ve got to get done,” he said. “If anything, there’s probably the same magnitude of work ahead, but it will just be with a much smaller number of customers who need a lot of individual support and attention.”

    Eighty-five per cent of CBA mortgage customers who were on deferrals have already resumed making regular repayments, The Australian reported. Only 1.6% of customers who deferred loans are still doing so, while the balance of those who have not yet resumed regular repayments are making reduced or interest-only payments, working with the bank to get their payments back on track, or selling their property.

    “For customers in a position of more challenging hardship, we’ve got other, more bespoke solutions in place for them, such as a period of ongoing extension or a freeze on repayments for a period of time,” Sullivan told The Australian. “Then there’s a slightly larger chunk of people who’ve all voluntarily chosen to exit their home. And then, obviously, there’s a very small number of deferrals still being worked through.”

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    With the property market booming, selling investment properties may be the best solution for some under-pressure customers.

    “If you’re an investor, and you’ve got an investment property that’s causing you challenges, it’s been an opportunity to take advantage of the market and sell it,” Sullivan said. “That’s a smaller cohort than the restructure proportion, but there’s still a decent chunk of customers in there who have decided to take advantage of the strong market and put their property on the market.”

    CBA is not forcing distressed borrowers to sell their family home; its moratorium on forced home sales will remain in place until September, The Australian reported. Rather, selling investment properties “is a choice that we put on the table for our customers,” Sullivan said.

    “Given our stance around the moratorium for owner-occupied customers, we won’t be pushing [owner-occupied] customers to do that,” he said.

    Ryan SmithRyan 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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