CBA promises not to evict home loan customers: APRA comes to the party

Commonwealth Bank has promised to keep customers in their homes if they can’t meet their mortgage payments in areas where hard lockdown has caused financial stress. 

CBA chief executive officer Matt Comyn today said the bank has extended the freeze on home foreclosures if customers are again unable to make their home loan repayments. 

“We believe extending our freeze on any foreclosures will give those customers who are again impacted by Covid more time to get back on their feet and reassurance that they can remain in their home this Christmas and into next year,” he said.  

The freeze will allow owner-occupier customers who have made their home loan repayments on time for at least 12 months before their deferral but are again unable to make their full repayments, to remain in their home until at least February 2022. 

Essentially, Australia’s biggest lender has extended the freeze on foreclosures announced in November 2020 that was intended to run until at least September 2021. 

During the weekend, the big four banks stepped up and announced more support measures for customers affected by tightened lockdowns in New South Wales and the reintroduction of restrictions in Victoria.  

These range from fee waivers on merchant terminals to free overdrafts for small businesses, home loan deferrals. 

CBA also said it will offer two-month deferrals on home loans to customers located in the Fairfield, Liverpool, and Canterbury-Bankstown local government areas who are experiencing financial hardship because of hard lockdown. 

Banks offered regulatory relief 

Meantime, the prudential regulator said any banks that froze the loans of customers financially hurt by the pandemic would not have to report the loans as a bad loan. 

“APRA is providing regulatory relief to assist ADIs in supporting their customers through this period. For eligible borrowers, ADIs will not need to treat the period of deferral as a period of arrears or a loan restructuring,” APRA said in a statement. 

“This will apply to loans that are granted a repayment deferral of up to three months before the end of August 2021. This will provide banks and borrowers with additional flexibility to manage the period ahead.  

That said, the regulator will require banks publicly disclose and report the nature and terms of any repayment deferrals and the volume of loans to which they are applied.  

Additionally, APRA warned lenders to continue to provision for these loans under relevant accounting standards. 

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