Half of households which deferred home loans have restarted repayments

Half of all households who cut or temporarily halted their mortgage repayments at the height of the Covid-19 economic crisis are back to making full repayments.

During the national lockdown in March and April, banks agreed to let households whose incomes had reduced to either temporarily stop, or reduce repayments on their home loans, a move that was commonly referred to as taking a repayments ‘holiday’.

At its peak in June around 7 per cent of all home loans were on deferred or reduced payment plans with their banks, according to data from credit reporting bureau Centrix.

But Mark Rowley, Centrix chief operating officer, said that by the end of September, the number of mortgages on deferral had halved from its June peak to 3.5 per cent of all home loans.

* Bank profits cut nearly in half by Covid-19 economic crisis
* ‘Staggering’ number of households behind on their mortgages
* Homeowners warned not to expect automatic extension of loan ‘holidays’

The crest of the mortgage deferrals wave peaked at 54,000 home loan borrowers having secured deals to make lower repayments, or defer repayments altogether, Rowley said.

In June, nearly seven in every 10 mortgages was on a repayment ‘holiday’.

David White/Stuff

In June, nearly seven in every 10 mortgages was on a repayment ‘holiday’.

By the end of September, there were around 28,000 home loans on deferred, or reduced repayments, he said.

Some of the worst hit areas had seen big improvements in household finances, Centrix’s data indicated.

In Queenstown, the proportion of home loans on which borrowers had agreed repayment reductions and deferrals peaked at nearly 12 per cent, but had now dropped to just under 7 per cent, Rowley said.

“Queenstown, Rotorua, and Taupo are still out in front, but the fact that the number of mortgages on arrangements has fallen suggests that domestic tourism is benefiting

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Richfield’s Economic Development Authority Authorizes Second Round Of Coronavirus Small Business Forgivable Loans

September 30, 2020

Since the outbreak of the COVID-19 pandemic, 1.4 million small businesses have either closed of suspended operations according to a study by Oxxford Information Technology Ltd. It is expected that as many as four million small businesses could be forced to shut down permanently by the end of the year, or about 13 percent of the country’s small businesses.

Richfield’s Economic Development Authority (EDA) is doing everything it can to provide financial assistance to the city’s small businesses as they try and weather the global health crisis. The authority has authorized a second round of small business forgivable loans.

“Businesses of all shapes and sizes are seeing a drastic reduction in income during the COVID-19 pandemic,” explained Richfield Chamber of Commerce Chairman Greg Worthen. “Richfield was one of the first cities in Minnesota willing to help its small businesses through this crisis in the form of a forgivable loan program. The program shows we are a business-friendly community.”

Due to the ongoing nature of the pandemic and its impact on revenue, some Richfield business owners have reached out to the authority to express their concerns about their business’s long-term financial viability.

At the authority’s September 21 meeting, the group dedicated another $118,000 for small business forgivable loans. The EDA Executive Director John Stark estimates that this will provide financial assistance for between 25 and 30 businesses.

“I applaud Richfield’s small businesses for finding new and creative ways of operating during the pandemic,” said Stark. “However, in these uncertain financial times, they still need help.”

Details of the Small Business Assistance Forgivable Loan Program include:

  • $2,500 for the first employee and $500 for each additional employee up to $7,500
  • Available to for-profit businesses that have operated in Richfield for at least one year
  • Applicants must be registered with
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Hawaii defense contractor accused of $12.8M in fraud coronavirus PPP loans

A Hawaii defense contractor has been charged with bank fraud and money laundering for stealing more than $12.8 million in Paycheck Protection Program money meant to assist businesses affected by the coronavirus pandemic, federal authorities alleged Wednesday.

Martin Kao, CEO of Martin Defense Group LLC, formerly known as Navatek LLC, transferred more than $2 million into his own personal accounts, a criminal complaint said.

Kao also submitted at least two fraudulent loan applications, authorities said.


“According to the charges, Kao falsely inflated the number of employees on the loan application and falsely certified that the applicant and its affiliates would not receive, and had not received, another PPP loan,” the U.S. attorney’s office in Hawaii said in a statement.

Congress authorized the Paycheck Protection Program, known as PPP, in March to provide emergency financial assistance to those suffering economic effects of the pandemic through forgivable loans to small businesses for job retention and other expenses.

Investigators talked to an executive and a former employee who said the company wasn’t affected by the pandemic, according to the criminal complaint.

The executive learned details about Kao’s loan application in July when he read a news article about Navatek being one of the largest PPP recipients in Hawaii. The company hired employees and opened branch offices during the pandemic, the executive told investigators.

Authorities describe Navatek as a “research, engineering, design, and innovations company that specializes in novel systems for the Department of Defense and other partners in academia and other scientific fields.”


Kao’s first court appearance is scheduled for Thursday.

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Thawing of frozen loans stalls as restrictions bite

The mixture of home loans to SME loans is broadly the same with the value of home loans falling to $160 billion in August from $167 billion in July and deferred SME loans falling to $53 billion from $55 billion over the same period.

Lender level data still shows Bank of Queensland as the big lender with the highest proportion of deferred loans overall accounting for 12 per cent of its total book. BoQ has frozen repayments of 11 per cent of its home loan book and 21 per cent of its SME loan book.

Earlier this week the bank announced it was ramping up provisions for bad debts to $175 million after taking into account the worsening impact of the virus crisis.

ANZ has the highest proportion of home loans on deferral with the data showing repayments on 12 per cent of its home loan as frozen. ANZ CEO Shayne Elliott has repeatedly encouraged borrowers who are experiencing problems to get in touch with the bank and put payments on hold.

Commonwealth Bank has the highest number of SME loans on deferral at 24 per cent of its total book. CBA elected to automatically defer the loans of its SME customers when the crisis descended, elevating the number of frozen loans on its books.

Foreign owned lender HSBC continues to exhibit one of the lowest levels of deferrals among lenders with just 4 per cent of its total loan book frozen, including 5 per cent of its home loan book and 6 per cent of its SME loan book.

Among second tier lenders Macquarie, AMP and ME continued to show elevated levels of deferred home loans at 10 per cent of their total housing book. Suncorp and Citigroup reported just 6 per cent of their books as frozen while

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Bank of England seeks to increase competition in home loans

LONDON (Reuters) – The Bank of England (BoE) set out proposals on Wednesday to end unfair advantages some banks have in calculating how much capital to hold for mortgages in a bid to increase competition.

Some bigger banks can use their own internal models for determining the risk weightings and therefore capital levels for home loans they have granted.

Typically this has resulted in lower capital levels than under the so-called standardised approach to risk weightings set out by regulators that many smaller lenders have to use.

The BoE’s banks supervision arm, the Prudential Regulation Authority (PRA), said it wanted to reduce risks that stem from “inappropriately” low risk weightings that can be thrown up by in-house models.

“For those firms whose risk weights may increase as a result of these proposals, and where capital requirements are not already determined by other capital measures (e.g. leverage), there would be costs for the firm associated with the additional capital required,” the PRA said in a statement.

The proposals would narrow differences between in-house models and the standardised approach and limit future divergence, it said.

“The PRA considers that this would support competition between firms on the different approaches,” the PRA said.

Reporting by Huw Jones; Editing by Gareth Jones and Mark Potter

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