The loan repayment deferral scheme introduced a year ago to help borrowers financially affected by the Covid-19 pandemic ends today.

The scheme allowed home and business loan repayments to be fully deferred temporarily. Deferrals were made possible by the Reserve Bank allowing these loans not to be viewed as in hardship. Credit reporting agencies also agreed that Covid-related deferred loans would not impact individual credit ratings.

The loan deferral scheme was introduced in March 2020 for six months and extended to 12 months in August 2020.

“We’re delighted with the scheme’s success. It made an important contribution to the wider story of how New Zealand as a whole managed the economic impact of the global pandemic in the last year,” says New Zealand Bankers’ Association chief executive Roger Beaumont.

In the last year over 66,000 household and business loans, with a total value of around $30 billion, were fully deferred. At the end of February there were around 3000 household and business loans still deferred, with a total value of around $1.1 billion. That represents a fraction of all household and business lending for banks, which totals around $480 billion. Those numbers have continued to decline through March.

“Banks are working closely with the few affected customers who still need help to get back on track. Assistance for these customers will be tailored to their individual circumstances.

“Options for customers in hardship may include a further temporary payments deferral, extending the term of the loan to reduce repayments, or moving to interest-only repayments for a while.”

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“Banks make their own individual risk-based assessments on all lending applications on a case-by-case basis. This will take into account the risk and security of the asset.”

Beaumont said the money provided by banks would provide support and skills to financial mentors working with families.

The New Zealand Bankers’ Association and FinCap have today announced a new partnership, with the banking industry contributing $5 million over five years to support the financial wellbeing of all New Zealanders.

The collaboration agreement will provide funding for initiatives that will directly benefit the 200 services FinCap supports who provide financial advice to tens of thousands of New Zealanders a year. This partnership between the banking industry and building financial capability sector is the first of its kind in New Zealand.

“Banks are acutely aware of the importance of building financial capability,” says New Zealand Bankers’ Association chief executive Roger Beaumont. “Providing funding that will provide support and skills to financial mentors on the ground is the right thing to do. Through working closely with FinCap we think we can make the $5 million go a long way.”

FinCap chair Susan Kosmala says the organisation holds a unique position in the building financial capability sector as a collective voice for services across Aotearoa New Zealand.

“This partnership will mean we can do even more toward achieving our vision so people, whānau and communities can live free of hardship.

“The funding has been negotiated independently of our core work so we can continue in our position as an advocate for the sector and the New Zealanders who rely on it – that includes holding lenders to account.

“It will strengthen our relationship with the banking industry by providing them with valuable insights into the financial hardships people are facing and what their role can be in addressing these issues for their customers and their communities.”

Beaumont says the timing will help those affected by the Covid-19 economic downturn.

“New Zealand has done incredibly well to get through 2020 in relatively good shape, but the downturn has hit certain parts of the community much harder than others. Banks have supported affected households and businesses through the hard months of 2020 and this partnership shows we want to help in other ways too.”

Funding under the partnership will be project-based, meaning that FinCap and NZBA can allocate resource to new issues as they crop up. The work is well on its way with projects in the first year including workforce development, Māori and Pasifika partnerships, marketing of agency services, cooperation between banks and budgeting agencies, and data and insights.

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The banks themselves support the dashboard and whistle-blowing service, with both projects having the backing of bank lobby group the New Zealand Bankers’ Association, the Financial Markets Authority and the Reserve Bank.

“During the Covid-19 lockdowns, banks helped thousands of New Zealanders get better at using online and mobile banking. Those customers aren’t looking back. However, we know that some customers still prefer face-to-face banking, and that’s what this banking hub trial is designed to test.”

“There’s no single solution to our current housing affordability issues, which is a complex challenge,” said Beaumont. “Potential responses include addressing both supply and demand issues. Today’s announcement is more about managing the demand side, and what mechanisms the Reserve Bank has available to do that.

Banks welcome today’s announcement that the Reserve Bank will consider the impact of its monetary and financial policy decisions on the housing market.

“Banks support today’s announcement and are keen to be involved in discussions around how to tackle the current housing situation,” says New Zealand Bankers’ Association chief executive Roger Beaumont.

“There’s no single solution to our current housing affordability issues, which is a complex challenge. Potential responses include addressing both supply and demand issues.

“Today’s announcement is more about managing the demand side, and what mechanisms the Reserve Bank has available to do that. That will likely have implications for bank lending. Our banks will continue to be responsible lenders and welcome the opportunity to be part of any further solutions,” says Beaumont.

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