Ece Demir - 23 Jun, 2020

Non-major lenders leading the way on home loans

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A group of non-major lenders with about 100,000 borrowers on the six-month deferral period for loan repayments are now showing the big four banks the way out of the COVID-19 crisis. 

These lenders begin the road to sizing up the ability of customers to restart payments or take more drastic measures after the deferral period ends.

The Australian Banking Association has stated in their media release that in the period of March 2020 – April 2020, there has been a total amount of $224 billion loans deferred and $165 billion mortgages have been deferred. 

Australian Banking Association CEO, Anna Bligh said, “these new figures, released today, shows banks working overtime to ensure assistance is given where needed to customers who are affected by this crisis”.

“The surge in demand for assistance from banks shows that the economic impacts continue to be felt, and by no means is the nation through this crisis,” she said.

Macquarie Bank, Bendigo Bank, Adelaide Bank and Suncorp are some of the biggest players in Australian home lending, accounting for 7.8% of the market.

Disclosures from the banks reveal they have frozen $19.5 billion worth of loans, or 8.3% of the $235 billion in total that have been deferred.

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Peter Warne, Independent Director and Chairman of Macquarie, has said in their annual release “Macquarie has not been immune to the effects of these once‑in‑a‑century global circumstances, as reflected by volatility in our share price in late March. Notably, the trajectory of Macquarie’s share price was broadly consistent with global peers either side of the end of FY2020”.

Macquarie Bank has one of the largest declared portfolios of deferred loans among the second tier of lenders, with just under $10 billion in loans on ice.

At Macquarie’s May results the bank revealed it had deferred $5.84 billion worth of home loans and personal credit, $1.5 billion worth of business loans and $1.84 billion worth of automotive finance.

Following the industry’s decision to grant a blanket reprieve on repayments to those who applied, Macquarie’s digital team built a process that allowed customers to defer a loan in just three clicks, with almost every one of the 30,000 deferrals granted by Macquarie completed online.

Bendigo and Adelaide Bank’s portfolio of deferred loans as declared on May 28 was smaller than Macquarie’s, with the bank revealing 20,411 customers with loans amounting to a combined $6.3 billion had been frozen.

Bendigo and Adelaide Bank has cut its variable and fixed business loans to help support their business customers in a challenging time for the sector and the economy.

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The Bank has reduced its business loan variable reference rates by 100 basis points for residentially secured business loans and 75 basis points for non-residential and unsecured business loans. This announcement provides small business customers with further support to help them navigate the challenges ahead.

“Our commitment to our customers and their communities has always been to support them through both the good times and tougher times. Small businesses are the engine room of our economy, employing millions of our fellow Australians and their success feeds into everyone’s success,” said Marnie Baker, Managing Director, Bendigo and Adelaide Bank.

Suncorp has followed suit and has aided in taking care of the matter before it escalates to far from their control.

The lender paused repayments on $4.05 billion worth of loans or 8.6% of its $47.2 billion loan book but provided no information on its $11 billion worth of business loans outstanding.

However, Suncorp has also aided small and medium businesses impacted by the COVID-19 pandemic following their new unsecured SME Support Loan. The loans are part of the Australian Government’s Coronavirus SME Guarantee Scheme which aims to help small and medium business owners through these challenging times.

Suncorp Bank CEO Lee Hatton said in a news release that the bank stands with the government to support and invest in Australian businesses and their local economies when they need it most. 

“At a time when business owners are feeling the strain, we’re here to help. For any small or medium-sized business owner – cashflow matters so these loans will make a real difference to them, their business and the people they employ” Ms Hatton said.

Words by Ece Demir

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