Mortgage fears: Some people will struggle to pay their loans. Here's what banks are doing about it

Some Kiwis ''will struggle to pay their mortgage'' following the impact of Covid-19, ANZ says. Photo / Getty Images

Some Kiwis will struggle to pay their mortgage in the wake of Covid-19 and banks have started intensive financial well-being and mental health programmes to assess how clients are faring.

Budget advisers also warn there will be tough economic times ahead and they have taken on more staff and are preparing for a ''big wave'' of people who will need help when government assistance and other incentive end.

The news comes hard on the heels of Australian ANZ Bank executive Mark Hand who said some borrowers in Australia may have to sell up if they couldn't afford their repayments.

Hand told the Sydney Morning Herald interest was still being capitalised on to deferred loans and there was a risk that some customers could dig themselves deeper into trouble by pausing their payments for too long.

In New Zealand, the latest data from the Bankers Association of New Zealand shows 59,885 loan repayments had been deferred valued at $20.2 billion from March 26 to June 30.

Banks in this country said the transtasman markets were different.

Stefan Herrick, ANZ corporate affairs external communications senior manager, said it had started an intensive customer well-being programme due to Covid-19.

''Unfortunately, some customers whose circumstances have changed due to Covid-19 are going to struggle to meet their home loan payments.

''We do regular check-ins with customers to see how they're faring and give advice where we can for them to manage their financial situations. The sooner we're able to look at their situation, the more likely we will be able to help.''

He said home loan deferrals are designed to help reduce customers' outgoings by temporarily stopping home loan repayments for up to six months.

But deferrals would extend the life of the loan and add to the overall cost ''because interest will continue to accumulate while they aren't paying''.

Nationally it had about 22,500 home loan deferrals and about 19,200 remain active as some customers opted out of the deferrals, he said.

Meanwhile, before deciding to extend mortgage deferrals, banks would assess the customer need.

''It would involve discussions with regulators and credit reporting agencies on any impact to responsible lending obligations and how the deferred loans are treated.''

Banks are offering financial and mental health programmes for its customers in the wake of Covid-19. Photo / Getty Images

Kiwibank Home Loans product manager Richard McLay said it has provided assistance to thousands of customers through its relief and resilience programme.

During the lockdown period, Kiwibank also partnered with Sir John Kirwan to provide the free wellbeing app Mentemia for staff and all New Zealanders.

Kiwibank had completed other work in the mental wellbeing space that included support for Gumboot Friday and employee programmes with Good Yarn and Synergy Health.

''We continue to work with customers who have taken up short-term home loan lending support but require further support to identify the best option for their circumstances at that time. This means understanding their specific financial situation and what their income and expenses are.''

''Options could include further extensions to the interest-only or deferred payment terms.''

New Zealand Bankers' Association chief executive Roger Beaumont said more customers had taken up reduced repayments options rather than fully deferring all loan repayments.

Meanwhile, he said mortgagee sales were rare and very much a last resort.

''Banks work hard with customers who find themselves in financial difficulty. It's in everyone's interests for banks to help customers in hardship get through."

Tauranga Budget Advisory Service manager Shirley McCombe says demand for its service will only increase. Photo / File

Tauranga Budget Advisory Service manager Shirley McCombe said SynCap its umbrella organisation was working very closely with the banks ''to refer to us as well''.

''I think the fact that the banks are working with organisations like ours that work at a very grassroots level is great.''

She said when mortgage holidays, wage subsidies and other assistance came to end ''we are going to see a huge increase in demand which is going to build as it has been but particularly around September and October''.

''We are trying to be as resilient and as nimble as we can to be able to respond.''

The service was employing a new financial mentor and a community connector who would be contacting local business and schools and working in the mobile clinic.