Coronavirus: Banks put up options for customers facing hardship

Empty wallet
Kiwibank and ANZ are among the banks providing options to help with mortgages. Photo credit: Getty.

Banks are providing a range of options to help customers facing financial hardship during the COVID-19 level 4 lockdown, as home and business owners start to feel the pinch.

On March 24, Finance Minister Grant Robertson confirmed a financial support package for homeowners and businesses whose incomes are affected by COVID-19. Mortgage holders and business owners can ask for a 'mortgage holiday', to stop paying principal and interest for up to six months.

Kiwibank external communications manager Kara Tait said that the bank is offering a mortgage holiday ("payment deferral") to all of its affected home loan customers. If their finances improve before the holiday ends, payments can be restarted.

"The standard offering will be either a three or six-month home loan repayment deferral based on the customer's situation," Tait said.

During the mortgage holiday, interest is still charged on the loan, increasing the home loan balance. At the end of the period, repayments are adjusted (increased) so that the customer still repays their loan over the original term.

"[If needed] a term extension [can be] arranged to keep repayments the same as what they were prior to the repayment deferral," Tait added.

Other options for homeowners needing to free up cash include changing home loan payments to interest-only, pushing out the home loan expiry date (reduce repayments) and changing to minimum payments (if they're currently paying more). 

For other customers, Kiwibank said it's offering emergency overdrafts and a payment plan for credit cards. For customers calling the contact centre, the bank has suspended phone banking fees.

"The process to apply [for COVID-19 support] is via the customer contact form on our website," Tait added.

The bank said that it is currently finalising details of the Government Loan Guarantee for business customers and is currently offering temporary overdrafts, interest-only lending and repayment deferrals.

"We've also waived merchant fees on contactless debit card transactions until at least June 30, 2020," Tait said.

ANZ said that as well as mortgage holidays and other flexible payment options for its home loan customers, interest rates have been cut. This will mainly benefit customers with home loans on floating rates and due to roll-over, as well as those with credit cards or other personal loans.

"To ease pressure on those with home loans, we've cut floating and flexi home loan rates by 0.75 percent, [the] one-year fixed rate special by 0.40 percent and [the] two-year fixed rate special by 0.30 percent.

"We're reducing [interest] rates on all credit cards, personal loans and overdrafts," the ANZ spokesperson added. 

For business customers affected by COVID-19, ANZ said that it has passed on the Reserve Bank's 0.75 percent cut on commercial, business and agri floating term loans. Business overdraft facilities have been increased and customers can access their business term deposits with no break fee.

"We decreased our fixed business lending base rates for six-month and one-year terms by 0.40 percent.

"We've [also] waived fees for contactless debit transactions for small business customers and international fund transfer fees until June 30 [and] waived loan restructuring fees."

ANZ personal and business customers needing help can request a call back by completing an online form.  

Confirmed as an essential service, banking systems are open during level 4 lockdown. Online and telephone banking, ATMs, cash withdrawals via EFTPOS and call centre centres remain open. 

People are asked to use contactless, self-service options wherever possible. Homeowners and businesses facing hardship, including a drop or loss of income can contact their existing bank or mortgage broker to discuss the best option.