Largest Banks in Australia Calls on Borrowers to Pay Home Loans

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Largest Banks in Australia Calls on Borrowers to Pay Home Loans

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Australian Bureau of Statistics provided the data on owner-occupier mortgages. The bureau revealed that the statistics increased to 13.6 per cent during the month, adding to the yearly increase of 19.2 per cent.

More than 50 per cent of Aussies believe that it is during this time when it is the best time to purchase a property. According to Finder, 59 per cent of Aussies believe that June is the best time to purchase. It was opposite to the only 42 per cent in April.

Generation Z, belonging to aged 18 to 23, is the one that is more confident in investing that makes up the 55 per cent of them.

However, older generations are more careful. The discrepancy with gender is not much, showing that men, 62 per cent,  are more willing to purchase a property than women, 57 per cent.

Money expert from Finder, Bessie Hassan, said that in a few months, there had been tons of property transactions happening.

Although some people could still ask for home loans, others seek financial help from financial institutions.

Many people reached out to financial institutions nowadays to cope up after the pandemic destroyed their livelihood. The coronavirus destroyed the livelihood of almost half a million Aussies.

Because of this demand, banks in Australia provide six months deferment to hundreds of thousands of customers who still have to pay their mortgage. This grace period aims to provide some financial burden from households due to the effects of the pandemic.

Many households feel that this grace period is necessary, especially for people who have just lost their jobs.

However, the grace period ended in September. Because of this, it is already not surprising that banks would start calling around 450,000 customers to reassess their loans. The total of these loans combined could reach up to a hundred billion dollars.

When it comes to the overall debts, around 900,000 Aussies have 274 billion dollars of debt, making it one out of nine mortgages.

Commonwealth Bank, one of Australia’s largest banks, disclosed that it called around 300,000 customers who asked for home loans to pay their mortgage. These customers have been postponing their obligations to pay a mortgage.

Matt Comyn, the CEO of the Commonwealth Bank, revealed this issue to the bank’s shareholders as one of the problems brought by the coronavirus. Comyn added in the shareholders’ meeting that some Aussie businesses and individuals would need support. He stated that the Commonwealth Bank made calls to over 300,000 borrowers who postponed paying their mortgage.

What they could do was to provide the customers with possible solutions and options to address the issues.

Last September, the Australian Banking Association (ABA) has already made its prior announcement.  It is about the possibility of contacting around 450,000 customers who asked for business and home loans in upcoming months. These calls aim to determine if the borrowers would be amendable to fulfil their obligations to pay after six months’ repayment holidays.

However, if the customers who asked for loans could prove that they could not repay their mortgage because of the pandemic, the large banks were willing to extend the postponement until March 2021.

It was one of the options or solutions that Comyn was talking about during the shareholders’ meeting. He referred to when he said that the customers might be experiencing financial difficulties and needed more support.

However, from June’s 67 billion dollars to September’s 42 billion dollars, the deferral rate plummeted almost 40 per cent.

In addition to the home loan issue, Ross McEwan, CEO of National Australia Bank, revealed last month that the home loan borrowers felt distressed and chose not to receive a call.

He said that it worried him that 20 per cent of the overall people they called would not answer or respond when they made calls and sent text messages and emails.

According to Anna Bligh, CEO of the Australian Banking Association, the customers know the best options for them, but it is the bank’s job to provide these options.

The video was played during the annual general meeting (AGM). This video presented how Commonwealth Bank, the biggest institution that provides a home loan in Australia, provided some customers’ postponement period.

The video stated how Commonwealth Bank fulfilled its social obligation to postpone payments to business and home loans. This deferment allowed the customers to have a breather.

In the past 29 years, this is the only time Australia has to face recession again because of the coronavirus’s shutdowns.

Treasurer Josh Frydenberg already revealed that Australia is in recession despite no official confirmation about it yet.

However, despite this recession, the number of home loans increased by 12.6 per cent in August.

The chief economist, Craig James, said that despite the issues brought by the coronavirus to the economy, the borrowers are acting otherwise. Many Aussies were more active in acquiring new homes today than before.

The home loans increased consecutively from July to August, but the number of loans also increased.

Despite the issues, financial institutions expect that borrowers should start paying their mortgage. They can pay either in full, in part, switch to interest-only loans, or postpone the payment again until January.

Last June, the jobless rate already reached 7.1 per cent, although the rate decreased in August, as opposed to the 7.7 per cent forecast by economists, there is still fear. There is still a danger that the unemployment rate will still increase in upcoming months to the point that nobody knows who can still pay for their home loans by January.

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