Banks will give borrowers more time to repay their loans by extending six-month repayment holidays by another four months.
The support extension means the banks will be wearing the financial burden of the coronavirus crisis well into next year.
There were around 800,000 borrowers who deferred their bank loans back in March to the tune of $260 billion.
Desperate businesses that have once again been forced into lockdown under a new wave of cases will be no-doubt relieved at the move.
Our Federal Treasurer Josh Frydenberg has thanked the banks and said the Australian Prudential Regulation Authority would in turn extend regulatory relief to the banks.
“The Australian Banking Association (ABA) has today confirmed that banks will continue to support customers who need it with up to another four months of deferred repayments on already deferred loans,” he told Australian Financial Review.
“This initiative has been agreed with APRA who will provide the banks with extended regulatory relief so they can continue to support their customers with greater flexibility during this time.”
Commonwealth Bank CEO Matt Comyn said the extension would be more nuanced than the first phase of relief and the bank would be making sure those that are granted the additional relief can repay their loans.
“From a prudential banking perspective, it’s important to understand whether a customer will be able to repay at a later date,” he told AFR.
“For customers who are directly impacted and you can assess that to be temporary, then it is reasonably easy to determine they will be able to make those repayments.”
The ABA says bank customers won’t simply be granted the extensions automatically and will come to negotiate their situation with their bank.