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ANZ reveals 95,000 loans were in COVID-19 deferral

ANZ reveals 95,000 loans were in COVID-19 deferral

Some 95,000 ANZ customers were accessing the bank’s COVID-19 assistance after experiencing financial difficulty due to COVID-19.

The bank said it had deferred home loans repayments for around 95,000 out of more than 1 million mortgages during the pandemic.

ANZ said there were 55,000 accounts where six month deferrals had been completed as at October 15.

Some 79 per cent are returning to full payment, 20 per cent had requested a further deferral, and 1 per cent have restructured their loan or sought additional support.

More than half of those home loan borrowers have either ended their deferral arrangements or advised ANZ what they intend to do when the loan repayment holiday ends.

The quantum was reportedly down 10 per cent month-on-month.

“I would like to acknowledge the terrific work of our 39,000 people who have done a great job for our customers and shareholders in very difficult circumstances despite competing priorities over this extended period,” the ANZ boss Shayne Elliott said.

ANZ also took a look at the credit transactions in its customers’ accounts, and advised 80 per cent have “stable or improved income”.

The revelation came as ANZ reported its full-year net profit dropped 40 per cent to $3.58 billion in the 2019-20 financial year.

ANZ still plans to pay shareholders a final dividend of 35 cents per share.

The ANZ website advised customers may be able to put your home loan repayments on hold for up to six months (but interest will continue to be charged on your loan during this period). You will not be required to make any repayments to your home loan during the assistance period.

During the assistance period when repayments are on hold, interest will continue to be charged on your home loan and will need to be paid back over your remaining loan term.
This is known as interest capitalisation.

The total loan amount owed therefore increases when repayments are on hold during the assistance period.

It also revealed ANZ has more than 236,000 commercial lending accounts in Australia with around 23,000 having received a deferral on their business loan repayments.

As at 15 October, 15,000 business loan accounts have completed their deferral or advised their intended action at maturity.

Of these deferrals 1,600 have received a four month extension with 60 percent of those being from Victoria and impacted by the longer lockdown.

On customer sentiment, speaking to bluenotes via video-link from the bank’s Melbourne headquarters with its group executive Australia retail & commercial Mark Hand said although Australia’s economy is recovering well from the COVID-19 crisis, “customers are still feeling anxious about the future.”

“[Australia has had] many years of economic growth. So it’s been a long time since our customers have seen anything like a recession,” he says. “It’s important in times like this [for] customers to ask questions, to go back to their trusted advisors.”

“Take a breath, have conversations with people that have been through this scenario. Talk to your banker and really think about how you want to manage for the next six or so months.”

In New Zealand ANZ has more than 529,000 home loan accounts in New Zealand with around 24,000 having received a deferral on their loan repayments. As at 15 October, there are 10,000 accounts in NZ currently on a deferral plan, representing 2% of the total New Zealand mortgage book.

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2020 saw 6,777 interest rate cuts across Australia’s home loan institutions

From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar’s database.

It recorded:

  • 880 cuts to variable rates for owner occupiers, with an average cut of -0.21%
  • 2,455 cuts to fixed rates for owner occupiers, with an average cut of -0.33%
  • 764 cuts to variable rates for investors, with an average cut of -0.21%
  • 2,678 cuts to fixed rates for investors, with an average cut of -0.32%

Over the same period there were 535 home loan rate increases, with an average increase of 0.20%.

On 1st January 2020 the average variable rate for owner occupiers paying principal and interest was 3.73% (80% LVR). Today that rate is 3.32% The lowest variable rate was 2.69% and it is now 1.99% (80% LVR) or 1.77% (60% LVR).

On the 1st January 2020 the average 3-year fixed rate for owner occupiers paying principal and interest was 3.15%. Today the average 3-year fixed rate is 2.30%. The lowest 3-year fixed rate was 2.69% and it is now 1.89%.

Australia's home loan institutions

Savings interest rates

From 1 January to 31 December Canstar recorded:

  • 529 cuts to savings, with an average cut of -0.18%
  • 262 cuts to regular savings accounts, with an average cut of -0.19%
  • 267 cuts to bonus savings accounts, with an average cut of -0.17%

On 1st January 2020 the average regular savings account rate was 1.12%. Today that rate is 0.43%. The maximum rate was 2.65% and it is now 1.75% (available for 4-months).

On 1st January 2020 the average bonus savings account rate was 1.47%, now just 0.75%. The maximum rate was 2.25% and it is now 1.35%.


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Home-buyer confidence at an all-time high


More than two-thirds of respondents in a recent survey believe that the conditions are right to purchase a home – a level of confidence not seen since the onset of the pandemic.

Finder’s latest consumer sentiment survey, which involved a nationally representative sample of more than 20,300 respondents, found that 67% of Australians feel that now is a suitable time get on the property ladder, up from 42% last April.

This marked the first time that home-buying optimism has reached this level since the financial comparison site started tracking the metric in May 2019.

Confidence was highest in Adelaide, where 77% of those polled thought now is the right time to buy a home. This was followed by Melbourne’s 70%, Brisbane’s 69%, Perth’s 67%, and Sydney’s 59%. Numbers were not available for Canberra, Darwin, and Hobart.

Those expecting house prices in their areas to “significantly increase” also hit an all-time high of 19%, climbing from just 5% in September last year.

Meanwhile, respondents who anticipate property values to “somewhat increase” rose to 44% from a low of 18% back in April.

Graham Cooke, insights manager at Finder, said that the recent spike home-buyer optimism was a good indication of economic recovery.

“This rebound in buyer confidence is indicative of increased economic activity over the past few months, along with an optimistic outlook for 2021,” he said. “Not only did the Australian government do a better job than most at restricting the spread of COVID-19, but federal and state economic support measures helped prop up the property market.”

Cooke said that property prices in every capital city, expect for Melbourne, have reached a higher level compared to the same time last year, adding that he expected “this trajectory to continue,” especially with 86% of economists in a separate Finders survey predicting a full recovery of national house values this year.

However, Cooke advised prospective buyers to carefully consider the pros and cons “before taking the plunge in the current market.”

“Low interest rates and government assistance packages like the First Home Loan Deposit Scheme put buyers in a strong position. The potential removal of stamp duty in NSW will be another boon for buyers and may spread to other states,” he said. “If you’re thinking about dipping your toe in the market this year, make sure you have a strong credit history, and shop around before signing up for a home loan.”


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50,000 investors in mortgage stress put their tenants in precarious position

investors in mortgage stress

There are 50,000 households that face high housing cost burdens themselves, following the pandemic, who also own a private investment property.

There are 956,000 households living in housing affordability stress (HAS) in Australia, according to a new AHURI report that looked into the impact of COVID-19, with Commonwealth rent assistance (CRA) reducing the number to 758,000.

The situation of the 50,000 was “cause for concern given that private renters have been disproportionately affected by the downturn,” the report noted after modelling from the University of Adelaide and Curtin University.

There is considerable potential for highly leveraged households owning an investment property, who are spending a higher proportion of their incomes on their own housing costs, to run into trouble meeting those costs and/or the servicing of their investment loan commitments, it noted.

“We estimate that there are around 37,500 mortgage home owners living in HAS who also own an investment property, and approximately 12,000 private renters in a similar position.”

It is estimated that the overall number of households living with HAS would have risen to 1,336,000 (from the 758,000 baseline) without the JobKeeper and JobSeeker interventions.

Investors in Mortgage Stress

The study found that the number of households living in a precarious situation is very high, and will likely remain high even after a partial recovery in 2021 and the withdrawal of much of the Australian Government’s income support measures.

Without an extension of the JobKeeper income support measures beyond March 2021, the number of households living in HAS is likely to increase significantly, the AHURI report concluded.

Households living with HAS and owning an investment property themselves are predicted to more than double.

The report noted JobKeeper and JobSeeker interventions reduced the incidence of housing affordability stress by a considerable amount: 861,000 households compared to 1.34 million without the intervention.

“As JobKeeper moves through its later phases, the predicted number of households in HAS is expected to gradually rise by a further 124,000; 73 percent of these households are private renters.”

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