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15k customers unable to restart repayments: ANZ

by Sarah Kendall5 minute read
15k customers unable to restart repayments: ANZ

ANZ has estimated that around 15,000 of its mortgage customers may not ever be able to resume repayments, due to the ongoing economic impact of the COVID crisis.

Speaking before the House of Representatives standing committee on economics on Friday (4 September), ANZ chief executive Shayne Elliott said that, based on conversations with customers so far, around 15,000 of the 84,000 home loan customers currently receiving repayment deferrals were unlikely to be able to resume repayments for 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. 

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“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’.”

Facing questioning from Labor MP Anne Aly around whether the banks had been obfuscating the true extent of home loan arrears levels during the COVID crisis, Mr Elliott said ANZ was unable to fully assess the extent of repayment delinquency levels until it had engaged with all customers that were currently on deferral.

“We won’t know that until probably around November when we’ve worked through those customers and decided what they think is the appropriate choice for themselves,” he said.

“I think we’ve been transparent about the people on deferral, because we’ve told everybody we’ve put $31 billion of home loans on deferral – I don’t think there’s any attempt to hide anything. 

“But I don’t think it’s fair to categorise all those as being in arrears, because we know a lot of those people are not in arrears – they took out the deferral as an insurance policy if things got worse.”

Since the COVID-19 pandemic began, more than 900,000 loans have been deferred by banks. At least 450,000 loan deferral customers will be assessed in coming weeks as they approach the end of their six-month deferral period in September and October. 

According to the Australian Banking Association, these include 105,000 business loan deferrals to small and medium-sized businesses, of which 65,000 will be assessed by the end of September, and 40,000 by the end of October. An estimated 260,000 mortgages are also due to be assessed, 80,000 by end of September and 180,000 by end of October.

[Related: Half of deferrals to be reviewed in coming weeks]

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