Big 4 bank estimates 15k customers cannot pay mortgage

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September 07 2020
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One of Australia’s big four banks has estimated that up to 15,000 of its mortgage customers may not be able to resume repayments, as the bank begins a two-month engagement process to assess the impact of COVID-19 on the home loan portfolio.

Big 4 bank estimates 15k customers cannot pay mortgage

Speaking at a hearing of the House economics committee on Friday, 4 September, ANZ chief executive Shayne Elliott said that based on discussions with customers, 15,000 of the 84,000 different home loans are unlikely to be able to pay in the foreseeable future.

“We have about 84,000 customers on deferral when we look at the data – it’s about 8 per cent of the book,” Mr Elliott said.

“About 10 per cent of them have seen their incomes go up over the period, so there doesn’t appear to be any stress – they saw [deferrals] more as an insurance policy.

“There’s a small number at the other end, somewhere around 10 to 20 per cent of that cohort, that have said, ‘Right now I’m really uncertain, I’m not confident about my ability to resume payments [anytime] soon and I’m probably going to need more help’.

“So, relative to our starting point, total numbers will be in the thousands of customers who will be in a struggling position.”

Following the initial six-month deferral period ANZ had offered its mortgage customers, Mr Elliott said the bank had commenced a process of engaging with those currently on repayment deferrals to determine their best course of action going forward.

“When we check in with a customer, they’ve got a few options – they can say ‘I want to start repaying again’, they can ask for a further deferral out to March or they can ask for different kinds of assistance,” Mr Elliott said.

“Perhaps that is moving to interest only, i.e. ‘I can pay something but I’m unable to repay the full amount’, or there’s the more extreme hardship where I’m not going to be able to pay and giving me more time is not going to solve the problem.”

The economics committee was also told by two of the major banks that customers are trying to get ahead on their credit card interest as falling consumer confidence sees customers slash their debts.

ANZ and Commonwealth Bank said customers had been paying down high interest accruing debt at faster rates to minimise financial pressures during the downturn.

CBA chief executive Matt Comyn said there had been a 17 per cent drop in unsecured personal loan debt, with the country’s largest retail bank recording a $2 billion drop in outstanding credit card debt.

ANZ chief executive Shayne Elliott also said its customers had wiped $2 billion from the bank’s credit card loan book, saying people have become more prudent during the pandemic.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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