How September is very nervous time for 450,000 borrowers with banks to end mortgage repayment breaks

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Australia’s big banks will this month be demanding 450,000 borrowers prove they can’t repay their mortgage even though Melbourne remains in lockdown indefinitely. 

In March, 900,000 home and business borrowers were given six-month mortgage repayment holidays as COVID-19 trading restrictions kicked in.

In rare cases, the banks have indicated they are prepared to extend those repayment reprieves until March 2021 with Australia now in recession for the first time in 29 years.

Australia's big banks will this month be demanding 450,000 borrowers prove they can't repay their mortgage even though Melbourne remains in lockdown indefinitely. Pictured are walkers on the Yarra River on September 6, 2020

Australia’s big banks will this month be demanding 450,000 borrowers prove they can’t repay their mortgage even though Melbourne remains in lockdown indefinitely. Pictured are walkers on the Yarra River on September 6, 2020

The Australian Banking Association, however, has confirmed 450,000 borrowers in September will be assessed to determine whether they deserved another break from servicing their mortgage.

Australian Banking Association chief executive Anna Bligh said borrowers who could service their mortgages had a duty to do so

Australian Banking Association chief executive Anna Bligh said borrowers who could service their mortgages had a duty to do so

That tally included 260,000 home borrowers, broken down into 80,000 who will be assessed this month and another 180,000 by the end of October.

Another 105,000 borrowers are small business owners who are being audited in September and October. 

ABA chief executive Anna Bligh, a former Labor premier of Queensland, said borrowers who could service their mortgages had a duty to do so.

‘As customers who are able to begin their repayments again, it allows banks to focus their support on those who really need it,’ she said. 

The banks are demanding the restart of repayments even though Melbourne, Australia’s second biggest city, remains in a strict, Stage 4 lockdown.

The Australian Banking Association has confirmed 450,000 borrowers in September will be assessed to determine whether they deserved another break from servicing their mortgage. Pictured is a terrace on the market at Carlton North

The Australian Banking Association has confirmed 450,000 borrowers in September will be assessed to determine whether they deserved another break from servicing their mortgage. Pictured is a terrace on the market at Carlton North

Victorian Labor Premier Daniel Andrews has indicated the lockdowns, affecting a quarter of the Australian economy, will continue until the state has less than five new daily cases for 14 days.

New South Wales and Queensland haven’t met that benchmark in recent weeks. 

National Australia Bank chief executive Ross McEwan last month suggested home borrowers who couldn’t repay their loans should consider selling their house.

On Sunday, the boss of Australia’s biggest business lender cautiously called for Victorian businesses to be allowed to reopen as the state government released a road map. 

National Australia Bank chief executive Ross McEwan last month suggested home borrowers who couldn't repay their loans should consider selling their house. On Sunday, the boss of Australia's biggest business lender cautiously called for Victorian businesses to be allowed to reopen as the state government released a road map

National Australia Bank chief executive Ross McEwan last month suggested home borrowers who couldn’t repay their loans should consider selling their house. On Sunday, the boss of Australia’s biggest business lender cautiously called for Victorian businesses to be allowed to reopen as the state government released a road map

‘We need to get Victoria and in particular Melbourne open for business as quickly as possible but we need to do it safely and cautiously,’ he said.

‘There is no playbook for responding to this crisis. Governments need to be flexible and act on the latest health advice and their continued support of businesses and households is vital.’

The Reserve Bank of Australia last month predicted a 40 per cent plunge in house prices was plausible.

A research paper feared the real estate would be twice as bad as the aftermath of the last recession in 1991.

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