Banks offer six month mortgage repayment deferrals

New Zealand’s retail banks are offering to defer repayments for all residential mortgages for up to six months for customers financially affected by Covid-19.

“We know that some customers are already being financially impacted by Covid-19 and have an immediate need. That’s why the banking industry as a whole is stepping up with this further package,” says New Zealand Bankers’ Association chief executive Roger Beaumont.

Mortgage repayment deferrals mean that affected customers who apply to their bank will not make principal and interest payments on their loans for up to six months. This package is in addition to what banks are already doing individually to provide assistance to affected customers.

“Anyone opting into a mortgage deferral needs to be clear about what this means for them. While there are obvious advantages for people in need, repayment deferrals may extend the time it takes to repay the loan and will add interest cost. So it may not be for everyone.

“It’s important to know that interest on these loans will still accrue, and deferred interest will be added to the principal amount of the loan.

“Banks will assess the suitability for each customer who is asking for a deferral.

“Banks will have different approaches to how they manage the process for customers to opt into a mortgage deferral. Those details, including eligibility criteria, will be available on bank websites.

“Importantly, we’d like to acknowledge the government’s support for this package. At such an extraordinary time we must all stand together to get through this unprecedented challenge to New Zealand,” Beaumont says.