Property buyers put straight onto hardship provisions
Exclusive: Home buyers caught in the awkward limbo of purchasing property and waiting for settlement as the COVID-19 outbreak hit have been granted relief by the banks.
News Corp has learned of cases of lenders showing goodwill to a vast number of purchasers struck by severe losses of income right as they were due to finalise their settlement.
Multiple banking sources have confirmed that despite questions of serviceability, in some situations, customers have been pushed straight onto banks' home loan deferral program or straight into interest-only repayments.
Approvals for the loans including existing valuations too.
Usually home loan settlement periods take between 30 and 90 days but can sometimes span even longer.
The Australian Banking Association's chief executive officer Anna Bligh said it was vital banks assessed each customer in this predicament to work out a fair resolution.
"The banks understand the seriousness of the situation and the consequences for borrowers and are working in earnest to resolve these situations on a case-by-case basis," she said.
In one example shared with News Corp, an airline employee who was employed at the time of buying a home suddenly found themselves unemployed during the settlement process on a loan of more than $800,000.
The bank involved said they were working through a resolution which is likely to result in the customer go straight into hardship and on a the lender's home loan deferral scheme.
Banks have been inundated with customers requesting home loan deferrals on their repayments for up to six months.
Under the scheme, financial institutions are allowing customers impacted by COVID-19 to have their repayments stopped and interest charges paused.
However once the loan restarts customers will be charged interest on the period of deferral and these costs will be added onto the loan's balance.
Finsure managing director John Kolenda, who manages companies including 1300 Home Loan, said "banks are working with customers who have faced difficult circumstances".
"Where they have had an unconditional approval they are still supporting them and settling the application because it's the right thing to do," he said.
The Commonwealth Bank of Australia (CBA) has received more than 50,000 requests to stop mortgage repayments in the past two weeks.
CBA's group executive retail banking services Angus Sullivan said they would support all home loan customers who had been approved to buy property over the past few weeks only to find themselves in changed financial circumstances.
"We want to reassure customers if they have purchased a property they can go ahead as planned," he said.
Home loan rates have tumbled in recent months - the lowest variable owner occupier principal and interest deal is now on offer by smaller lender Reduce Home Loans at just 2.39 per cent.
However credit card interest rates have not budged - many deals are still attracting rates above 20 per cent.
Originally published as Property buyers put straight onto hardship provisions