Covid’s desperation home sales
Many mortgage-holders who put their repayments on hold during last year’s Covid-19 lockdown have struggled to pick them up again, new data show.
Credit reporting bureau Centrix analysed the data in its credit files to reveal that while the bank mortgage deferral scheme had been an overall success, many households had not been able to resume repayments successfully.
More than one in four mortgages that were part of the deferral scheme had either been closed, dealt with under bank hardship provisions, or moved to interestonly repayments.
‘‘The closure of the mortgage accounts indicates that the home was likely sold, and the mortgage repaid, or they have closed their account and have sourced alternative finance,’’ Centrix chief executive Keith McLaughlin said.
Centrix compiles credit reports on everyone in New Zealand with data passed to it by the likes of lenders, banks, insurers and power companies. The data give Centrix a helicopter view of the nation’s borrowing habits.
The mortgage deferral scheme was created by the Reserve Bank and the mainstream banks to allow homeowners to reduce or temporarily halt home loan repayments amid the economic disruption caused by the Covid-19 pandemic.
‘‘Overall, the deferral scheme was successful, with nearly threequarters of deferred mortgages able to move to principal payments,’’ McLaughlin said.
He said 73 per cent of home loan borrowers who were granted mortgage deferral had now resumed full principal-and-interest repayments, aided by lower mortgage rates.
But 10 per cent of home loans that went into deferral were still on interest-only repayments at the end of May, he said, a move typically adopted by homeowners only when they could not afford full repayments.
A further 3 per cent of the home loans that were under the deferral scheme were shifted into ‘‘hardship’’ management by banks and remained there in May.
In addition, 14 per cent of home loans that were once under the deferral scheme had been closed. That could mean one of two things: that the home had been sold and the home loan paid off, or that the borrower had refinanced their home with another lender, resulting in the closure of their home loan account.