“The banking industry worked closely with him in the early response to covid and was grateful for his support for banks to offer customers deferred or reduced repayments for around $70 billion in loans.”
Last year they made a direct contribution of $8.52 billion to the New Zealand economy by spending $6.12 billion running their businesses here and by paying $2.4 billion in tax. The total contribution is more than their combined profits.
People who were facing any significant change in circumstance that would cause them difficulty paying their mortgage – such as losing their job – should ring their bank immediately.
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“Banks are responsible lenders and when assessing a loan application they apply higher ‘serviceability’ rates to see if you could still repay the loan if interest rates go up. So typically, there’s a buffer already built in for borrowers.”
“Anyone experiencing financial difficulty should contact their bank to discuss their options. The sooner you talk to your bank, the more likely they’ll be able to help. Options could include lengthening the term of your loan, to reduce the amount of regular repayments. In some cases, temporarily moving to interest-only repayments may also be an option.”
Bankers’ Association chief executive Roger Beaumont says the country’s banks are very conscious of the impact current economic conditions will have on many New Zealanders. Anyone experiencing financial difficulty should contact their bank to discuss their options.
In response to the Reserve Bank governor’s comments today about banks supporting households and businesses in the current economic environment, New Zealand Bankers’ Association chief executive Roger Beaumont says:
“Our banks are very conscious of the impact current economic conditions will have on many New Zealanders. Anyone experiencing financial difficulty should contact their bank to discuss their options. The sooner you talk to your bank, the more likely they’ll be able to help.
“Options could include lengthening the term of your loan, to reduce the amount of regular repayments. In some cases, temporarily moving to interest-only repayments may also be an option. Our banks are here to help.
“Banks are responsible lenders and when assessing a loan application they apply higher ‘serviceability’ rates to see if you could still repay the loan if interest rates go up. So typically, there’s a buffer already built in for borrowers.
“Many borrowers are also well placed to face an increase in interest rates because they’re ahead on their loan repayments. In June nearly 46 per cent of people with a home loan were ahead on repayments. As interest rates declined over recent years to historic lows, these borrowers likely retained their repayments at the same level, or increased them, to help repay their loans faster, which shows a good level of financial capability.
“There’s a similar story for people with credit cards. Around two thirds of card holders pay off their balance without incurring any interest costs.”
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The NZ Bankers’ Association commissioned an analysis from former Treasury secretary, Dr Graham Scott, which estimated the proposals would cost households, businesses and the economy about $1.8b a year.
Financial mentors and banks are working together to help people in small communities across New Zealand to access banking services. These ‘banking collaborations’ are one of several projects being delivered under a partnership between FinCap and the New Zealand Bankers’ Association, which is funded by NZBA members to the tune of $5 million over five years. The partnership aims to make a real difference for financial mentors and their clients.
Banking collaborations are happening in places from Kawakawa in the Far North to Balclutha in Otago. They are designed by local financial mentoring services to meet the needs of people in their communities. These local initiatives help people do their banking online and provide broader education sessions. In some cases, financial mentors also help people by taking them to a local bank branch.
Wuki Beazley, financial mentor and community educator at the Bay of Islands Budgeting and Community Services Trust says the partnership funding means they’ve be able to help clients across all ages. “An older woman who has been using online banking for a while was still driving 35 minutes to her local branch as she was unable to download bank statements. She can do this herself now, saving herself money and one less issue to stress about.”
“We’ve also helped rangatahi aged between 13 and 15 to apply for bank accounts and set up online banking services. This process is daunting for them because they lack understanding of banking processes, have no transport to the bank, and no devices. Having the ability to support these rangatahi has been rewarding for us all.”
Through the partnership funding, the Anglican Care Centre in Whangārei is running a series of senior tech courses. Centre administrator Nikki Smith says they saw a need to provide practical support for older clients. “They had difficulty answering their phones and replying to texts. When younger people tried to show them how to use their phones they would go too fast, or the seniors would forget what they’d been shown.
“So far we’ve run four courses for three days each, with around 28 people attending. The course covers the basics of technology as well as using online and telephone banking.
“There’s been a lot of laughter and people telling us how well it has gone and how much they’ve learnt – and they keep telling their friends so the list keeps growing. Also, one client now knows that if your tablet is hot, do not put it in the fridge!”
In addition to the banking collaborations delivered by financial mentors around New Zealand, other projects funded through the partnership include:
- Iwi and Pasifika Development: linking financial mentoring services with Iwi and Pasifika people to help develop financial capability for people in financial hardship.
- A Day in the Life: Decision makers from various sectors spend time with a financial mentor as they work with clients to gain insights into the issues and services offered.
- Workforce Development: Establishing better resources and training for financial mentors to help them assist clients experiencing vulnerability to access banking and other services.
- Data and Insights: Collecting anonymised client information to develop insights into debt management and spending behaviour before and after budgeting intervention.
FinCap chief executive Ruth Smithers says: “Financial mentors work with people experiencing some very difficult financial issues. Sometimes that leads to challenging interactions with banks. This partnership shows the benefits of banks and financial mentors working together to support good outcomes for everyone involved.”
New Zealand Bankers’ Association chief executive Roger Beaumont says: “We’re delighted our members have supported this $5 million investment in financial mentoring to deliver real benefits for people in need. The banking collaborations in particular are delivering tangible results and align nicely with our recently expanded regional banking hubs trial that we’re running with our six largest member banks.”
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