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“Given the extraordinary circumstances it seems fair that individual credit ratings are not affected by a pandemic-related mortgage deferral.”

Anyone who has deferred their mortgage repayments for up to six months because they are financially impacted by Covid-19 will not have their credit rating affected as a result of the deferral, provided they were not in arrears before the pandemic.

Banks have agreed this initiative with credit reporting agencies.

New Zealand Bankers’ Association chief executive Roger Beaumont says this approach to credit reporting during Covid-19 is intended to provide certainty and relief for affected customers.

“Banks have stepped up at this time to offer mortgage deferrals for eligible customers. This agreement means those customers won’t have their credit ratings negatively impacted for the period they’re not making repayments.

“Given the extraordinary circumstances it seems fair that individual credit ratings are not affected by a pandemic-related mortgage deferral.

“This only applies to customers who were up to date with their repayments before Covid-19.

“There may be other factors that can affect a customer’s credit rating, including if the customer was already in arrears before applying for a mortgage deferral, so we encourage customers to talk to their bank early if they’re finding it hard to keep on top of things.

“We acknowledge the support of the Reserve Bank in facilitating this initiative. They have helpfully agreed that banks can treat deferred loans as performing,” Beaumont says.


Mortgage deferrals are one of a number of ways banks can help customers in need. Other ways banks are helping customers include:

Due to the very high number of calls to contact centres at this time, customers are encouraged check their bank’s website for information on how to access assistance in the first instance.

Further information about how banks are helping customers get through is available at: https://www.nzba.org.nz/consumer-information/covid-19/banking-industry-response-to-covid-19/

The government’s official Covid-19 website also includes useful information on financial support: https://covid19.govt.nz/individuals-and-households/financial-support/

ENDS

“The latest ratings reflect what’s happening in the environment in which banks are operating rather than the banks themselves,” said New Zealand Bankers’ Association chief executive Roger Beaumont.


“Last week we announced that New Zealand’s retail banks are offering mortgage repayment deferrals. That represents immediate financial relief for many customers. Banks do not profit from this. In fact, they cover the cost of providing that credit for the period of the deferred payments.”

New Zealand’s banks are offering up to a total of $6.25 billion in guaranteed loans to businesses financially impacted by Covid-19. Eligible businesses can apply to their bank for new lending under the scheme from today.

“Businesses are at the heart of our economy and we know many are doing it tough as a result of Covid-19. We also know we need to work together to get through this. That’s why we are pleased to have reached an agreement with the Government that will help banks provide loans to businesses that have been financially impacted,” says New Zealand Bankers’ Association chief executive Roger Beaumont.

“The Business Finance Guarantee Scheme will provide individual business loans up to $500,000. To be eligible to apply to the scheme businesses must be New Zealand based with an annual turnover between $250,000 and $80 million.

Under the scheme banks will make available new lending to eligible businesses. The loans will be supported by a guarantee in a risk-sharing agreement with the Government. The Government will cover 80 per cent of the risk and banks will cover 20 per cent. That amounts to a total of $5 billion for Government and $1.25 billion for banks.

“Businesses seeking to apply for a loan under the scheme should visit their bank’s website for more information before contacting their bank to discuss their eligibility and the assessment process.

“Banks will follow their normal credit assessment process to see if businesses qualify for the scheme and will take into account the circumstances businesses find themselves in due to Covid-19. That process usually takes approximately ten working days.”

Supported loans are limited to a maximum term of three years, with the exact terms of individual loans to be determined by each bank.

The scheme rules exclude funding certain activities including agriculture, property development and property investment.

“Individual banks will of course continue to offer support to affected businesses outside the scope of the scheme,” says Beaumont.

Banks participating in the scheme include ANZ, ASB, BNZ, Heartland Bank, HSBC, Kiwibank, SBS Bank, TSB and Westpac.  

Further information about the Business Finance Guarantee Scheme is available on participating bank websites.

ENDS

“Banks will follow their normal credit assessment processes to see if businesses qualify for the scheme and will take into account the circumstances businesses find themselves in due to covid-19.” 

New Zealand Bankers’ Association CEO Roger Beaumont said banks’ credit assessments typically take 10 working days. 

“Businesses are at the heart of our economy and we know many are doing it tough as a result of Covid-19,” said Beaumont.

Roger Beaumont, New Zealand Bankers’ Association chief executive, last week urged people to go online for information first after bank call centres were jammed with people calling through only to find long wait times.

Roger Beaumont, chief executive of the New Zealand Bankers’ Association, said: “While there are obvious advantages for people in need, repayment deferrals may extend the time it takes to repay the loan and will add interest cost