The major bank has reported that it has received requests from more than 50,000 customers wanting access to its COVID-19 loan relief packages.
According to National Australia Bank (NAB), it has so far received requests from more than 50,000 personal and business customers wanting access to its loan relief packages announced in the wake of the coronavirus pandemic.
The requests relate to the bank’s packages such as the deferral of home loan and business loan repayments for up to six months, and the introduction of an unsecured business support loan up to $250,000.
NAB recently launched the new NAB Business Support Loan as part of the federal government’s SME Guarantee Scheme and is available for business with an annual turnover of less than $50 million for a term of up to three years.
Further, as per the banking industry’s commitment earlier this month, principal and interest repayments would be frozen for the first six months of the loan term.
However, the loan, which will be available until 30 September, will primarily be offered via the proprietary channel, with brokers asked to refer eligible clients to a NAB business banker.
NAB also joined the other major banks in outlining how it would support those affected by the coronavirus pandemic and its economic impacts, including mortgage repayment relief.
It said mortgage customers would be able to pause home loan repayments for up to six months, including a three-month checkpoint.
In addition, NAB announced cuts to interest rates on new loans and all overdrafts, as well as reductions on variable rates for small-business loans and fixed rate home loans.
At the Financial Review Banking & Wealth Summit Crisis last week (30 March), NAB CEO Ross McEwan said the bank had seen a jump in enquiry volumes since the COVID-19 relief packages were announced, with the bank receiving a year’s worth of assistance calls in just one week.
“Last week, we did have huge numbers of enquiries coming in from customers, something like 200,000 enquiries coming across all of our different networks, including our branch online and also into our call centres,” Mr McEwan said.
In March, the federal government, the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) announced a range of new measures to stimulate the flow of credit in the domestic economy and “cushion the blow” dealt by the coronavirus outbreak.
In response to these measures, the Australian Banking Association (ABA) announced that its members would suspend principal and interest loan repayments for distressed small-business customers for six months.
Measures for credit card customers
NAB has also announced that it will waive late payment fees and reduce minimum monthly payments on all credit cards for 1.6 million credit card customers for at least the next three months as part of the measures to deal with the impact of the coronavirus pandemic on customers.
Customers using NAB’s lowest rate credit card, NAB Low Rate Classic Card, will also receive a reduction of 100 basis points in the interest rate charged, effective 27 April for new cards.
For existing customers, the rate reduction takes effect from the opening date of their next statement of account from 27 April.
Personal loan customers can also request a reduction in their minimum repayments to $100 a month for up to six months on an opt-in basis from 17 April.
NAB said the rate cut, fee waiver and reduction of minimum monthly payments to credit cards will be automatically applied to existing and new accounts and do not require customers to contact NAB to activate.
CBA offsets interest on interest
The Commonwealth Bank of Australia (CBA) has announced that it will make payments to support customers who have been granted a six-month deferral to offset interest on interest costs during the six-month deferral period.
Group executive retail banking services, Angus Sullivan, explained that when a home loan repayment is deferred for six months, interest is calculated and added to the loan balance each month. This can result in customers paying interest on interest each month.
“We will make a one-time payment to all customers who are receiving a home loan deferral because of the coronavirus,” Mr Sullivan said.
“This means for an average loan of $350,000, CBA will be refunding approximately $45 to offset the effect of interest on interest over the six-month period. Customer payments will vary based on their loan amount and interest rate.”
The measure follows CBA’s previous announcement that it will make repayment deferrals for all home loan customers.
[Related: ‘More help’ issued for SMEs and sole traders]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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