If your household has been experiencing the negative economic impacts of COVID-19, you’re not alone, with an increasing number of Australians requesting hardship support on home and business loans
The latest statistics from the Australian Banking Association (ABA) found that over 57,000 customers have received hardship assistance over the recent lockdowns in parts of Australia. The number of customers has almost tripled since last month, growing from 20,000.
Over 30,000 loan payment deferrals have been recorded for home and business loans. And it’s not just home and business loans that Aussies are struggling to afford, with the ABA’s ‘hardship assistance’ statistics also including delayed credit card repayments and waived fees and charges.
Unsurprisingly, New South Wales recorded the greatest number of customers taking assistance, with 57% of housing deferrals and 69% of business deferrals for NSW residents. In total, 88% of all deferrals are related to home loans, according to the ABA.
However, it is still significantly lower than figures recorded for hardship assistance in 2020, when over one million home and business loans had to be deferred.
How homeowners can ask for help
Chief Executive Officer of the Australian Banking Association, Anna Bligh, said: “While the majority of hardship approvals have come from NSW and Victoria, customers are reminded not to tough it out on their own no matter where they live.”
“As lockdowns continue to be extended across cities and states, it is no surprise more strain is being put on people and businesses, but it is important to remember that banks are here to help,” Ms Bligh said.
“Over the last month, we have seen a substantial rise in business owners putting their hand up for assistance, and I encourage anyone else who is feeling the strain to do the same.
“Support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, no matter where they live or their line of work,” she said.
If you’re currently unable to meet your home loan repayments, or your regular income has decreased and you soon may not be able to, it’s worth speaking to your lender as soon as possible.
Home loan lenders have practices in place to help protect you from default due to worst case scenarios like COVID-19, or even small-scale life changes like a job redundancy. Simply, pick up the phone and call your lender and request information about its hardship assistance.
Just keep in mind that a mortgage payment deferral is not “free”, and by pausing your repayments and not chipping away at your principal owing, you may end up paying more in interest over the life of the loan. Ensure you can budget for potentially higher repayments once the deferral is over. Even if it’s only $20 more a month, it adds up over a 25- or 30-year home loan.