COVID-19 Home Loans FAQs

Answers about COVID-19 (coronavirus) and home loans

How does the current pandemic situation affect home loans? We’ve compiled answers to some of the questions we are receiving from customers. The situation is evolving, so we’ll keep this page up to date with new information as it is released.

Homeowners and renters

How is COVID-19 (coronavirus) affecting renters and what’s being done to alleviate stress?

All Australian states and territories have put a six-month moratorium (suspension) on evictions for both residential and commercial tenants during the COVID-19 pandemic. The Prime Minister announced this change on the 29th of March.

What’s more, the Australian government is offering a safety net package worth $1.1 billion to those hit hardest, with jobseeker allowances, mental health support and early release of superannuation listed as just some of the key features. Visit mygov.com.au to check your eligibility, make claims and view terms and conditions.

However, this doesn’t mean that landlords will need to make reductions in rental payments or forgo rent. Landlords and renters are encouraged to negotiate short term agreements, with landlords encouraged to seek help from their banks if necessary.

What happens to unpaid rent after the six-month moratorium? Please contact your state’s Residential Tenancy Authority (RTA) or your body corporate for more information. For guidelines around routine rental inspections and home inspections, also check with your body corporate.

Last updated: 12/05/2020

Should I fix my loan or keep it at a variable rate?

Whether or not you should fix your loan’s interest rate or keep it variable is a decision you’ll need to make based on your current and predicted financial circumstances.

On the one hand, you may find a fixed-interest rate provides certainty in that you know what your repayments will be over a period. On the downside, you may not reap the benefits of interest rate cuts like you could with a variable-rate loan.

All in all, we’re in an ever-changing landscape. As such, you may like to compare interest rates, fees and features over on our comparison service, or chat to one of our brokers, so you’re confident you’re making a well-informed decision.

Last updated: 12/05/2020

Can I reduce my monthly repayments to save money?

If you talk to a broker, they can suggest how you could potentially reduce your monthly repayments, whether it’s by extending your loan term or moving to a lower interest rate, for example. Furthermore, your options will depend on your personal circumstances.

Times are tough, and our brokers are here to support you in reviewing your situation. To find out more about your options, request a call from one of our trusted brokers today.

Last updated: 12/05/2020

I might have trouble repaying my loan. What can I do?

If you’re facing financial hardship and are struggling to repay your loan, contact your bank immediately and advise them of your circumstances. Banks have hardship programs in place to help assist you and offer different repayment options.

Otherwise, if you’re looking to reduce home loan costs, we can help. Simply request a call from one of our trusted brokers to discuss which options are available to you. Or, if you’d prefer to compare your loan against a number of others online, you can do so with our comparison service.

Last updated: 12/05/2020

Will I be supported if I miss a monthly repayment due to COVID-19?

Banks and financial institutions have financial hardship programs in place to help you if you’ve missed a repayment. These programs may look different between lenders, and may vary, depending on your circumstances. Your lender might defer your loan repayments, employ an interest-free period or waive fees and charges.

If you have missed a monthly repayment or suspect you will, contact your bank or financial institution immediately - don’t delay in getting help.

Please see How should I approach my bank when asking for help? It’s just below.

Last updated: 12/05/2020

How are homeowners being supported during this COVID-19 pandemic?

Member banks of the Australian Banking Association (ABA) announced they would offer assistance to those suffering from COVID-19. The ABA has 22 members in Australia, including the big four.

This relief will vary, depending on your circumstances, but could include:

  • deferring your loan payments up to six months;
  • waiving fees;
  • implementing interest-free periods or no interest rate increases;
  • offering debt consolidation to help make repayments more manageable.

Depending on your bank, you may or may not be able to access a redraw facility during this time (i.e. access extra repayments you’ve made on your loan).

Your interest may also be capitalised, which means that all interest on your paused repayments will be added to your loan balance. For example, if you typically pay $1,000 in interest on your loan each month and pause your repayments for six months, $6,000 would be added to your loan.

Once your pause ends, you’ll also need to make up for these missed repayments over an agreed period. At this point, your lender will recalculate your loan balance and your loan term may be extended. Your repayment amount will either stay the same or be adjusted accordingly.

Keep in mind that due to this, you may pay more in interest over the life of your loan.

Finally, any Australian granted a six-month deferral on mortgage repayments will not have their credit rating affected – as long as they were up-to-date with repayments prior to COVID-19.

Last updated: 12/05/2020

How should I approach my bank when asking for help?

For borrowers experiencing financial hardship, talk to your bank as soon as possible and be transparent about your circumstances.

Each bank has different mechanisms in place, which result in an application for a loan repayment freeze.

Last updated: 12/05/2020

New home loan applicants

Are house prices rising due to COVID-19?

We’re facing an ever-changing situation. On top of this, the Australian Government implemented restrictions on real estate auctions and open house inspections. Please look to your state government for current rules and guidelines around inspections and auctions.

While much of Australia enjoyed a stable market a few months ago, with Sydney and Melbourne both seeing house prices going up, the impacts of COVID-19 on the property market are yet to be fully realised. You can learn more from industries resources like CoreLogic.

Last updated: 12/05/2020

Is the Reserve Bank of Australia expected to cut interest rates even further?

The Reserve Bank of Australia (RBA) meets each month to (among other things) assess the cash rate for the country, to help control inflation and the cost of living. As the cash rate remains at a historic low, as of May 2020, it is unclear whether rates will be cut further.

Different measures have been put into motion, however, to mitigate further economic fallout of the pandemic.

For instance, the RBA announced a money-printing program for the first time to help prevent a COVID-19-driven recession.

On top of this, the RBA will buy Australian Government bonds as part of its first-ever quantitative easing program. It will also provide a three-year funding facility to provide cheap loans to Australian banks.

The Federal Government is working on new stimulus measures to try to prevent the COVID-19 outbreak shutting down large parts of the economy. More than half of the package, $11.5 billion, will hit Australia's economy in the next few months to prevent the economy falling into recession.

The package will include one-off cash payments of $750 to social security, veteran and other income support recipients and eligible concession cardholders; as well as billions of dollars to support the cash flow of businesses.

Last updated: 12/05/2020

I had pre-approval, but my partner has lost their job. Does it still stand?

You’re required to meet the conditions of your pre-approval for it to stand. So, if your approval was originally based on two incomes, you would need to go through the approval process again.

In these tough times, we’re here to help you understand your home loan options. You can request a call from one of our brokers to learn more about your next steps.

Last updated: 12/05/2020

How could applying for a loan change? (i.e. Will application times change?)

When you apply for a loan, you’re still required to complete the usual application process. This means the lender will assess your financial capability to make your repayments.

With more and more Australians working from home, you may also find that any face-to-face application requirements could be delayed.

As such, it’s a good idea to talk through your options with a trusted broker to understand:

  1. what’s changing, and
  2. what’s required of you when you apply for a home loan.

Our brokers take the legwork out of comparing your options and keeping you updated on the latest industry developments during this difficult time. To speak to one of our brokers, you can enquire on any of our home loans through our comparison service, or you can request a call.

Last updated: 12/05/2020

Should I wait to apply for a home loan?

On 5 May 2020, the Reserve Bank of Australia (RBA) left the official cash rate at the historic low of 0.25%.

In a statement, Phillip Lowe, RBA Governor: Monetary Policy Decision, said, “The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band.”

Whether or not you should apply for a home loan now or later depends on your current and future financial situation. While the official cash rate set by the RBA does put downward pressure on home loan interest rates, making it an appealing time to consider such a move, lenders still need to approve you for the loan in the first place.

It’s essential that you remain as informed as possible about the current landscape and which options are available to you. Our partner brokers are ready to support and empower you to make a decision that’s right for you based on industry movements and your circumstances. Chat to one of our trusted brokers today.

Last updated: 12/05/2020

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COVID-19 FAQs