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Covid-19: Mortgage Holiday

26 March 2020

Covid-19 is infecting my mortgagee repayments!

New Zealand’s property market over the past few months has been buoyant. First home buyers have been missing out on a property when multiple offers are presented with buyers making offers above the asking price.

To complicate things further, Covid-19 is rapidly spreading through the community raising worldwide concern and posing threats to the economy and the future of the property market.

Many home owners are worried about whether it is affordable to service their mortgage during this time of uncertainty and would much rather go on a mortgage holiday.

Is a Mortgage Holiday possible for me?

The Government, retail banks and Reserve Bank have announced a $6.25 billion financial support package for home owners and businesses financially affected by covid-19. It is a six month mortgage holiday period aimed to cushion financial distress.

What does the Business Finance Guarantee Scheme provide?

  1. Short term credit for solvent, small and medium sized firms; and
  2. A six-month principal and interest payment holiday for mortgage holders.

Further specifics of this incentive are currently being finalised and will become available to the public in the next few days.

The six-month mortgage holiday will mean people won’t lose their homes or businesses as a result of the economic disruption caused by the pandemic, or at least will give businesses and people a chance to get back on their feet, depending on how long the lock down drags on for.

Note at this stage the mortgage holiday will not stop interest accruing on your loan, it just means you won’t have an obligation to pay it during the six month period if you request the holiday from your bank.

The Reserve Bank is assisting banks by providing appropriate capital rules and have reduced banks core funding ration from 75% to 50%, further helping banks to make credit available.

What about renters?

For renters, the Government is looking to adapt their scheme for those worried they can’t meet their rent. There have been no changes made yet.

There are also no plans to change the rules about repaying student loans.