Many customers who have taken a mortgage repayment holiday fear they won’t be able to meet repayments once this period ends.
Many customers who have taken a mortgage repayment holiday fear they won’t be able to meet repayments once this period ends.

Mortgage customers fear losing their homes

Exclusive: Stressed-out mortgage customers fear they may be forced to sell their homes in the next six months as JobKeeper and repayment holidays come to an end.

About $175.5 billion in mortgages have been deferred and the potential default figures could equate to $75 billion, new analysis shows.

Despite mortgage interest rates remaining at record lows, many households have come under extreme financial pressure during the COVID-19 pandemic and 485,000 home loans have been deferred - many for up to six months.

But new research by financial comparison website Mozo found of those who had taken out a mortgage holiday:

• 43 per cent don't think they will be able to service their loan when the repayment holiday period ends.

• 53 per cent are worried they may be forced to sell their home within six months.

But experts say for those under financial stress they should contact their lender as soon as possible and try and work out a resolution.

More than 485,000 home loan customers have taken out deferrals on their loans since the COVID-19 pandemic broke out.
More than 485,000 home loan customers have taken out deferrals on their loans since the COVID-19 pandemic broke out.

Finsure managing director John Kolenda, who manages companies including 1300HomeLoan, said lenders are willing to work out a fair plan to help borrowers cope financially.

"Actively engage with their lender to understand all of their options and to look at various scenarios available," he said.

"You could negotiate a low rate with your lender or look at other payment options and whether you can go to the lowest repayments possible, which is usually interest-only repayments."

Home loans remain at record lows with three-year fixed rates as low as 1.99 per cent and variable rates from 2.17 per cent.

Mozo's spokeswoman Kirsty Lamont said borrowers nearing the end of JobKeeper and a mortgage repayment holiday which are both due to wind up in September for most people "need to get on the phone to their bank".

"Explain your situation, try and negotiate an extension to your mortgage holiday," she said.

"The banks do have hardship provisions in place and there is talk the government and banks might look to extend mortgage holidays."

During repayment holidays interest charges still accrue on the debt owing and are added to the loan amount.

The Australian Banking Association's chief executive officer Anna Bligh said banks were "working hard" to help customers impacted by COVID-19 who were coming to the end of their deferral period.

"Banks have begun the process of 'checking in', contacting each customer with a deferred loan to understand their financial situation and discuss their options during this midpoint of the deferral period," she said.

"Encouragingly, banks are seeing that many deferred customers are choosing to resume making loan repayments."

The Reserve Bank of Australia board meets on Tuesday and it's expected the cash rate will remain on hold at 0.25 per cent.


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