Banks’ response to Covid-19

At this extraordinary time New Zealanders are all working together to respond to the Covid-19 global pandemic. As part of that response, New Zealand’s banks know they have an important role to play in supporting customers financially affected by Covid-19 to get through.

Talk to your bank

We encourage anyone who is financially affected by Covid-19 to contact their bank as soon as possible. Customers will be the first to know how they’re doing. The sooner you contact your bank, the sooner the bank can work out how to help you based on your particular circumstances.

Banks have practical information on their websites about how they can help their customers through.

Due to the very high number of calls to contact centres at this time, customers are encouraged to check their bank’s website for information on how to access assistance in the first instance.

Ways banks can help

When talking to your bank about possible assistance to get you through, here are some ways they might be able to help you:

  • Reducing or suspending principal payments on loans and temporarily moving to interest-only repayments
  • Temporarily deferring all principal and interest repayments on home loans and some small business loans
  • Providing loans to businesses under the Business Finance Guarantee Scheme
  • Helping with restructuring loans, for example extending the term of the loan
  • Consolidating loans to help make repayments more manageable
  • Providing access to short-term funding
  • Waiving some fees, for example breaking a term deposit or setting up an overdraft facility
  • Providing advice on how best to manage investments such as KiwiSaver at this time
  • Offering advice and support in cases of financial hardship
  • Referring individual customers to budgeting services.

Mortgage repayment deferrals

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

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, are available on bank websites.

Anyone who has deferred their mortgage repayments will not have their credit rating affected as a result of the deferral, provided they were not in arrears before the pandemic.

Business Finance Guarantee Scheme

The Business Finance Guarantee Scheme provides individual business loans up to $500,000 to eligible businesses.

The loans are supported by a loss-sharing agreement with the Government.

Banks will follow a credit assessment process to see if businesses qualify for the scheme and will take into account the circumstances businesses find themselves in due to Covid-19. That process usually takes approximately ten working days.

Supported loans are limited to a maximum term of three years, with the exact terms of individual loans to be determined by each bank.

The scheme rules exclude funding certain activities including property development and property investment.

Businesses seeking to apply for a loan under the scheme should visit their bank’s website for more information before contacting their bank to discuss their eligibility and the assessment process.

Individual banks will also continue to offer support to affected businesses outside the scope of the scheme.

Banks participating in the scheme include ANZ, ASB, BNZ, Heartland Bank, HSBC, Kiwibank, SBS Bank, TSB and Westpac. 

More information about the Business Finance Guarantee Scheme is available here:
https://www.business.govt.nz/covid-19/business-finance-guarantee-scheme/

Contactless payments

Banks recognise concerns about using PIN pads on payments terminals at this time. To help control the spread of Covid-19 banks have agreed with other payments industry participants to increase the PIN limit for contactless card payments from $80 to $200.

More information about this is available here:
https://www.paymentsnz.co.nz/resources/articles/increasing-pin-limit-contactless-payments/

Other useful information

The official Covid-19 website provides a range of useful information, including a section on financial support:
https://covid19.govt.nz/individuals-and-households/financial-support/