•   
  •   

Australia Mortgage deferrals are winding up, so what happens next?

23:06  01 october  2020
23:06  01 october  2020 Source:   msn.com

Sen. Gardner, Trailing Hickenlooper in Colorado, Backs SCOTUS Seat Push

  Sen. Gardner, Trailing Hickenlooper in Colorado, Backs SCOTUS Seat Push The Colorado senator has said he will support a "qualified nominee" who will "protect our constitution, not legislate from the bench, and uphold the law," should one be put forward.Gardner released a statement in which he outlined his commitment to voting to confirm should a "qualified nominee" who will "protect our constitution, not legislate from the bench, and uphold the law," be put forward.


Video: Andrews reaffirms confidence in public sector to lead response (Sky News Australia)


a hand holding a remote control: About 9 per cent of all home loans were still on repayment deferrals in August. (ABC News: Jessica Hinchliffe) © Provided by ABC Health About 9 per cent of all home loans were still on repayment deferrals in August. (ABC News: Jessica Hinchliffe)

For six months people with mortgages have been able to pause repaying their loans. The offer, made by Australia's banks to their home loan customers, temporarily stopped what is normally the biggest expense for many households.

EXCLUSIVE: Prime Minister’s letters pressured Daniel Andrews to take 1000 ADF troops

  EXCLUSIVE: Prime Minister’s letters pressured Daniel Andrews to take 1000 ADF troops Prime Minister Scott Morrison pressured Daniel Andrews to accept 1000 Australian Defence Force troops to Victoria in July to help the state fight the deadly second wave of COVID-19.Fire service officials give evidence at Bushfire Royal Commission

Mortgage pausing, also known as a repayment holiday, was taken up on around one-in-10 mortgages.

Now it's over. Millions of Australians need to start making payments again. What happens next is uncertain.

Mad March

To understand the issue, let's go back. Six months ago in mid-March coronavirus crushed the economy, almost overnight.

Swathes of businesses were forced to close to stop the spread of the virus and huge numbers of newly unemployed people queued in front of Centrelink offices.

With the Newstart payment for unemployed people below the poverty line, and the Morrison Government at that time knocking back calls for a wage subsidy, the immediate concern was how millions of Australians would keep a roof over their head.

Family fearing homelessness after their landlord began calling in 'deferred rent' as Queensland's coronavirus eviction moratorium ends

  Family fearing homelessness after their landlord began calling in 'deferred rent' as Queensland's coronavirus eviction moratorium ends Next week, Queensland becomes the first state to lift its moratorium on evictions, and Matt Emptage and his family are fearing they could soon be hit with an eviction notice after their landlord asked for them to repay "deferred rent"."Not knowing if you're going to have a roof over your head is worrying," he said.

The banks stepped in to offer a six-month pause on mortgage repayments. It had the double benefit of providing security for the 8 million people who rent homes in Australia, many of whom live in properties where the landlord has a mortgage on an investment property.

"I can say, to anybody who is individually concerned about their mortgage, there is assistance that banks can provide already," Anna Bligh, chief executive of the Australian Banking Association, said on March 20.

"Anyone who is concerned should not hesitate to call their bank."

The offer to pause mortgages was given out generously and taken up quickly.

For many customers, it was as simple as responding to an email.

The most recent August figures from the banking regulator, APRA, show that 9 per cent of housing loans, worth $160 billion, were still on hold.

For small business loans the proportion was even higher, 16.2 per cent, worth $53 billion. And that was slightly below the peak level, as some borrowers had already resumed repayments.

Yemen's terrifying road to Taez on brink of collapse

  Yemen's terrifying road to Taez on brink of collapse Lorries filled to the brim with goods labour up and down the dangerously winding and precipitous road of Hayjat al-Abed, the mountainous lifeline to Yemen's third largest city. "It is considered a lifeline of the city of Taez, and it must be serviced as soon as possible because about five million people (in the province) would be affected," he told AFP. Governance in Taez is complicated, with the internationally recognised government practically absent and the city split and under the control of rival groups -- some linked to Yemen's Muslim Brotherhood-influenced Al-Islah party and others to Salafists, another Islamist movement.

The offer wasn't entirely selfless. The banks prevented a fire-sale of housing by over-stretched investors and didn't have to incur massive losses due to surging defaults and bad debt write-offs.

The repayment holiday also simply added the interest to, or extended the term of, the loan. However, added administration costs mean they're unlikely to have made any money on the offer.

Restarting the mortgage machine

Having created a time-bomb, policymakers and the banks now need to defuse it.

Since March, Newstart became JobSeeker, with a generous $550 a fortnight coronavirus supplement. A massive program called JobKeeper kept millions paid via a wage subsidy to employers. Both are now being wound back.

Gold Coast-based financial adviser Simon Enger put his mortgage on pause at the start of the crisis.

"My wife got stood down from work, and given the uncertain environment that was ahead at that point in time — there was no Governmental support — I thought it was a great strategy to put my mortgage on pause," he said.

"I knew that we'd be right for a period of time, so I mean it was manageable, but I guess that you know you always looking for ways to mitigate risk as much as possible."

Victoria is ‘ahead of time’ as massive restriction easing set for October 19

  Victoria is ‘ahead of time’ as massive restriction easing set for October 19 Victoria will take the “important step” and remove all restrictions on people leaving home on October 19 well ahead of the previously designated timeframes.Fire service officials give evidence at Bushfire Royal Commission

Many people did as Mr Enger did, pausing their loan because of uncertainty about their situation.

Support offered by the JobSeeker and JobKeeper programs started after mortgage pausing became available and could explain why one-in-five people who deferred their mortgage actually kept making repayments.

In July, banks announced a four-month extension to the deferral program beyond its planned September end date, but warned it wouldn't be automatic and that any customer who can afford to start repaying their mortgage or business loan will be expected to do so.

The banks can't kick the problem down the road forever, NAB group executive for personal banking Rachel Slade said.

"Extending a deferral is only really an option where there's certainty about returning to a sense of income to repay the debt," she explained.

"Otherwise, really, the customers are just deferring an inevitable outcome and in fact the situation they might find themselves in later on is worse than facing it today."

The number of staff dealing with hardship cases and customer queries has been increased at all banks, and institutions have been proactively contacting customers to find out their intentions as the pausing period ends.

"Often customers find themselves in these situations with a raft of things going on in their lives," Ms Slade said, urging people to contact their institution as early as possible.

Mortgage approvals bounce back to highest level since 2007

  Mortgage approvals bounce back to highest level since 2007 Mortgage approvals rose to their highest level for nearly 13 years last month in the latest sign of a post-lockdown recovery in the housing market. © PA Mortgage approvals fell to record lows earlier this year The number of home loans signed off rose to 84,715, up from 66,288 the month before, according to latest Bank of England figures.Live updates on coronavirus from UK and around worldThat took mortgage approvals back above pre-pandemic February levels for the first time and was the highest number since October 2007.

"People don't get out of bed and decide not to pay their home loans."

Banks have signalled they're going to work to keep people in their homes by switching customers to lower payments or interest-only options. But investors who can no longer pause their mortgages might be pushed to sell into a falling market.

The boss of the nation's largest bank and home lender, the Commonwealth Bank, didn't sugar coat the message when he spoke in mid-August about the looming end of pausing.

"We will certainly do all we can to keep customers inside their home," Matt Comyn told Elysse Morgan on The Business.

"Investment properties is a different proposition to a home that people live in, it really is going to depend on individual customer's circumstances.

"Unless a customer is in default it is their decision, but of course if you can avoid that you would like to."

'Call your bank, and call early'

With so many people facing tough decisions, the financial industry regulator ASIC and consumer organisations are urging banks and customers to work together.

Karen Cox helps run the National Debt Helpline — where people can call and speak to a free independent financial counsellor when they're having trouble with money and loans.

"One thing is absolutely clear," the chief executive of the Financial Rights Legal Centre said.

"Whereas deferrals were given with very, very little contact or information in March, it will not be the same this time around."

There's concern that people are hiding from their problems.

The Australian Financial Review recently reported that one-in-five customers with paused mortgages were "ghosting" their lender — not responding to phone calls, text messages or emails.

"Research shows that the sooner people come to terms with the fact that they're in trouble, speak to their credit provider and get some sort of arrangement in place … the greater the chances are that they're going to come out the other end of this," Ms Cox said.

Senior banker Rachel Slade agrees: "My key message for any customer who is feeling uncertain or unsure is to call your bank, and call early."

Simon Enger's situation has improved. His wife has found a new job and his Sydney-based financial advice business is looking more secure than it did in March.

He's talked to his bank and worked out how to re-start payments. He's urging people who've been in his situation to talk, not hide.

"Have the conversation with the lender, because they want to work with you as much as possible," he said.

"They don't want to be left with having to offload a whole lot of properties or make decisions in relation to people's lives."

Armed forces must 'fundamentally change' to counter new threats .
The mindset of the UK's armed forces must "fundamentally change" and troops must be prepared for "continuous operating" so that Britain isn't "overwhelmed" in what will become the biggest shake up of Britain's military in generations.The proposal has been laid out by General Sir Nicholas Carter, the chief of the defence staff.

usr: 1
This is interesting!