Kiwis apply for mortgage holidays in their thousands.

Kiwis apply for mortgage holidays in their thousands.
The leading New Zealand banks have already received over 10,000 enquiries from mortgage holders relating to the Government’s newly introduced mortgage holiday scheme.  The main Kiwi banks have gone live with online application forms which have already received thousands of applications since they went live.
 
Most of the main New Zealand home loan providers began accepting applications for mortgage holidays (also known as mortgage payment deferrals) last Friday, the 27th March 2020, with some a little slower in going live but expecting to get their online portals up and running this week to accept mortgage holiday applications.
 

How many mortgage holidays have been requested?

 

ANZ Bank Mortgage Holidays

 
Since the announcement from the government relating to mortgage holidays the banks have issued various responses and updates.  An ANZ Bank New Zealand spokesperson told NZ Herald that it had already received 2,500 applications for home loan deferrals since Friday afternoon.  The bank has said that it will actively discuss borrowers’ options with them as a mortgage holiday may not be the best course of action for all borrowers.
 
When asked about options, the ANZ spokesperson said “Because customers will pay more on their loan over the longer term, we recommend they carefully consider whether a home loan repayment deferral is right for them,” she stated.
 
“We’ll be discussing options with customers when we speak to them. If reducing a customer's repayment amount would provide enough relief, we may be able to suggest ways to restructure a customer's lending to reduce their repayment amount.”
 
 

TSB Bank Mortgage Holidays

 
All banks are pushing awareness of the negative elements of taking a mortgage holiday as well as the positive benefits.  TSB Bank’s GM customer solutions and service Tracey Berry highlighted that this deferral was “not a free lunch,” and that the home loan plus accumulated interest would still need to be repaid eventually and interest keeps accruing during the time of the mortgage ‘holiday’.  
When asked how many people were requesting mortgage holidays she said TSB has gotten around a thousand enquiries, but is anticipating many more over the coming weeks.
“The longer the lockdown continues, the more impact it will have,” Berry said.  “We have up to 1,000 in the pipeline, but not all of them would go to deferral as some might choose to go interest only instead.”
 

BNZ Mortgage Holidays

 
BNZ has already launched its online application form relating to mortgage payment deferrals.  When asked about the volume of mortgage holiday requests a BNZ spokesperson confirmed that the bank has received over 4,000 applications as of close of business on Friday 27th March.
 

ASB Mortgage Holidays

 
We have only a few details relating to mortgage holiday requests for ASB customers but when asked for comment an ASB spokesperson said it had received a “significant amount” or mortgage holiday requests and expected more.
 

Kiwibank Mortgage Holidays 

 
A popular bank amongst Kiwis for their mortgages, Kiwibank went live with their mortgage holiday request application form last week as well.  A Kiwibank spokesperson said that the bank has received several thousand applications, with half of all website enquiries being about the mortgage holiday.
 
“Due to the sheer demand we are asking our customers to visit our website in the first instance and lodge their initial request via our online website form,” the spokesperson said.
 
“We have a special team getting back in touch with customers, assessing and approving solutions depending on individual situations.”
 
 

Tips for requesting a Mortgage Deferral Payment

 

With the majority of New Zealand banks now up and running with their mortgage holiday application forms as the first point of contact it is worth doing it right.  If you are emailing the bank directly about a mortgage holiday or filling in an online form he are some tips to help you:
 
Be clear on what you want.  Have you looked at all the options.  Rememebr a Mortgage is holiday is not a freebie… interest will keep accruing and you will pay back more on your loan overall.  Some options to consider.  Do you want to go on to an interest-only arrangement for 6 months?  or do you want a full mortgage repayment holiday (pay literally nothing off your loan over six months with the additional interest simply added to the full value of the total mortgage.)
 
How is your household income being affected by COVID-19? For example, you might be getting a 20% reduction in wages/hours or you could have been made redundant or be at risk of redundancy. Just be very honest with your bank.  They want to help.  It is better to assist you through this time and not have a default account on their hands.
 
The current bank assistance packages (such as mortgage deferral payments / mortgage holidays) are only being offered for clients that have been affected by the fallout from COVID-19.  They can’t be accessed for other purposes so if it is business as usual for you in your job don’t make up other reasons to try and access this assistance.
 

Is a Mortgage holiday the right solution for you? 

 
The first thing to note is that a Mortgage Repayment Holiday is definitely not a ‘holiday’… it’s not something fun, it is a serious financial decision.  It is far more appropriate to refer to a mortgage holiday as a Mortgage Repayment Deferral.  A far more accurate description as the core interest is still added to the loan over the deferral period.  You simply don’t need to make repayments.
 
When it comes to applying for the financial relief packages that the New Zealand Government have put together for COVID19 there has been a variety of responses from NZ Banks and lenders.  In some cases a mortgage or financial advisor can help you directly and in some cases you have to go direct you to your lender.  The easiest thing to do is get in touch with our partners and talk through what options are right for you.  They will help as much as they can and there is no fee.
 
All of the New Zealand banks are being instructed by the government to assist the consumer and so the banks understand the pressure their clients are under and are coming up with options that help their customers to maintain their mortgages and to stay in their homes.  The government relief steps will enable individuals to continue in life without worrying about defaulting on their loan payments while jobs/incomes may be uncertain.
 
So… as hard as it seems… relax.  Try not to stress, and have faith that everyone is in the same boat.  We are all in this together and we can only control the controllable.  At Money Compare the guiding principles are that whatever decision you make, it’s the right decision… and this will get easier.
 
Want to chat to a financial advisor about your mortgage options?  Get in touch now for free. 
 
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Tuesday, March 31, 2020