Loan Repayment Deferral Scheme Ends Today
The loan repayment deferral scheme introduced a year ago to help borrowers financially affected by the Covid-19 pandemic ends today.
The scheme allowed home and business loan repayments to be fully deferred temporarily. Deferrals were made possible by the Reserve Bank allowing these loans not to be viewed as in hardship. Credit reporting agencies also agreed that Covid-related deferred loans would not impact individual credit ratings.
The loan deferral scheme was introduced in March 2020 for six months and extended to 12 months in August 2020.
“We’re delighted with the scheme’s success. It made an important contribution to the wider story of how New Zealand as a whole managed the economic impact of the global pandemic in the last year,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
In the last year over 66,000 household and business loans, with a total value of around $30 billion, were fully deferred. At the end of February there were around 3000 household and business loans still deferred, with a total value of around $1.1 billion. That represents a fraction of all household and business lending for banks, which totals around $480 billion. Those numbers have continued to decline through March.
“Banks are working closely with the few affected customers who still need help to get back on track. Assistance for these customers will be tailored to their individual circumstances.
“Options for customers in hardship may include a further temporary payments deferral, extending the term of the loan to reduce repayments, or moving to interest-only repayments for a while.”