APRA suspends mortgage arrears

Via APRA comes the end of mortgage arrears:

The Australian Prudential Regulation Authority (APRA) today confirmed its regulatory approach to the COVID-19 support packages being offered by banks and other lenders to their borrowers in the current environment.

Many banks have recently announced COVID-19 support packages that provide affected borrowers with an option to defer their repayments for a period of up to six months. These packages have mainly been offered to small business and home loan customers.

Where a borrower who has been meeting their repayment obligations until recently chooses to take up the offer not to make repayments as part of a COVID-19 support package, the bank need not treat the period of the repayment holiday as a period of arrears. Similarly, loans that have been granted a repayment deferral as part of a COVID-19 support package need not be regarded as restructured.

APRA will be writing to all authorised deposit-taking institutions (ADIs) to advise them of the specific reporting treatment for loans subject to these support arrangements. APRA will require ADIs to report to APRA, and publicly disclose, the nature and terms of any repayment deferrals and the volume of loans to which they are applied. ADIs must also still continue to provision for these loans under relevant accounting standards.

APRA also confirmed that the Coronavirus SME Guarantee Scheme announced by the Commonwealth Government yesterday is to be regarded as an eligible guarantee by the government for risk-weighting purposes.

Lol.

David Llewellyn-Smith
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Comments

    • Hasn’t this been the way for over a decade now, screws savers/prudent responsible people, lets reward all the gamblers and free spenders, who never put anything away for a rainy day.

      It’s pathetic and shows the corrupt and rotten moral fiber of our society.

    • As an aside the banks have confirmed that mortgage holidays are not a financial gift i.e. interest accrued during the non-payment period is rolled into capital outstanding so all debts WILL BE PAID.

      • Going in today to ask for assistance, but will be asking for IO for next six months so the loan balance will remain as is. Will give us extra $700 per fn we could use at the moment. Don’t think I’ll be the only one

          • With Bendigo, Hanei. Took 40 minutes to get through their 1300 number. Simply said I was underemployed as a result of the downturn in the economy. No proof sought and I’m not even on the loan. Offered a 6 month deferral easy as. And, I wouldn’t be surprised in more PPOR relief comes from Govt. I know we’ll end up with a bigger balance at end of period, but it our intent to finish our reno and sell before then. All risky I know, but if our house goes down in value, our next purchase should be cheaper as well… Shame your loan balance doesn’t take a hit when the property market turns…

  1. UrbanWastelandMEMBER

    This will end with debt jubilee. It has to. The only alternatives are a complete reconfiguration of global power in favour of Russia and China, or war. Cancellation of debt is easier, and the politician and bogan classes of the world, as well as corporations that took on mountains of debt to repurchase stock, get to keep what they stole.

    • I’m all for having my mortgage wiped out but someone on the other side has to take the hit.

      One mans’ debt is another man’s asset (wealth). $260 trillion of global debt wiped out in a jubilee is $260 trillion of wealth wiped out. When you think of it like that a jubilee ain’t happening.

  2. Question will be if this is enough to stop the horse from bolting and shift sentiment. Heard from a colleague that their Chinese neighbour is trying to sell and get the hell out of Australia – last open inspection had no viewers.

  3. whether you put it in the figure or not is irrelevant. Situation is the same. They can’t pay the loan, can’t pay for anything else, need serious help. I would also suggest they make deals with tenants so they can also defer. If a tenant cant pay then there goes rental income then there goes mortgage repayments then there goes the bank.

    • TailorTrashMEMBER

      I have some money spread over a.number of banks ..to date I have avoided the big 4 …but am wondering if all this strain on the system might sink a few smaller players
      ……was thinking of moving some out of a smaller bank into say com bank ……..if the governement to save one surely that would be it …..thoughts from any of you banker types appreciated

  4. This will prevent a bunch of forced sales and foreclosures for sure. But in sum the amount of money in the housing system is not going to increase. No one who is on a repayment holiday will be able to leverage up their equity into a new property. No one who was about to buy but who would immediately need a repayment holiday is going to get that loan or settle that new purchase.

    • You may be right. Or you may be spectacularly wrong.

      Maybe buying with an immediate repayment holiday is going to be the savvy investors’ strategy. It’s the new 100% loan….

      • lol
        Never say never!

        Still.

        I spoke to my mortgage broker this morning. He reports tougher assessments for any occupations at risk of losing work due to COVID19.

        In other words if you are gonna need a repayment holiday straight away, you are not getting the loan (or the same size loan as before).

  5. Trout à la Crème

    If shelter weren’t affordable people wouldn’t be buying them, it’s supply and demand. I wonder how many suspensions there will be that weren’t directly related to COVID-19.

    • Nah.

      People buy things they can’t afford all the time.

      If it’s a big enough mistake it eventually sends them bust. Sometime slowly, sometimes real fast.

  6. Jumping jack flash

    No repayments necessary but the interest of course will continue to accumulate. It must be repaid at some point or the banks will collapse, unless propped up by the government and printing.

    I guess from this they’re thinking this will be a short-term thing. There’s no way it is sustainable for the long term. Much less sustainable than the infinite debt model because that model still relies on interest being repaid.

    • yeah but unless there is a bigger fool out there to take out the bigger mortgage, house prices don’t go up. ANd if they are not going up, they are going down. Don’t dare peddle out the L shaped recovery b.s. Doesn’t work un a ponzi scheme.

  7. At least there’s some transparency; these numbers are worth watching: “APRA will require ADIs to report to APRA, and publicly disclose, the nature and terms of any repayment deferrals and the volume of loans to which they are applied.”

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