COVID-19 refinancing breaks records: Anna Bligh on ABC News Breakfast

TRANSCRIPT: ABA CEO Anna Bligh was interviewed by ABC News Breakfast on 2 November 2020.

She spoke about the record high number of refinancing by Australian bank customers, the encouraging amount of people coming off their loan deferrals and the prudent actions of Australia’s banks in managing the risks associated with climate change.

SPEAKERS: ABA CEO Anna Bligh ABC Journalist David Speers.

David Speers: New data has shown the coronavirus and low interest rates has seen thousands of Australians renegotiate or switch their home loans. It comes as the Reserve Bank is tipped to lower rates to a new record low tomorrow. Anna Bligh is the CEO of the Australian Banking Association and joins us now from Sydney. Thanks for your time this morning. Look interest rates have never been lower we know, how many Australians have refinanced or switched their mortgage so far this year?

Anna Bligh: Well, it’s been an interesting feature of 2020 that in fact, we’ve seen a record high number of Australians switch their loans, either to another bank or gone to their own bank and got a better deal. It’s about half a million this year and for the first time, in May/June, we saw more people refinancing their loans than people getting new loans for the first time. So it does tell you that people are looking for a bargain, and that if they do want to go and get a better rate it’s out there, the market’s so competitive, and people are finding it easier to switch if they want to.

“we’ve seen a record high number of Australians switch their loans, either to another bank or gone to their own bank and got a better deal.”

ABA CEO Anna Bligh

David Speers: There’s an expectation the Reserve Bank will lower rates a little further tomorrow from .25 to .1, do you reckon banks will pass that on?

Anna Bligh: Well, I think it’s a brave person that predicts anything on Melbourne Cup Day either on the track or off the track but if we do see that, I think banks will do what they’ve done throughout the past 12 months, and that is pass as much as they possibly can on to their customers, but of course, we need to remember that it’s not only borrowers who are customers, but also people who have savings and deposits accounts and they’re getting very, very low rates. So banks will want to balance all of that out.

David Speers: What about the mortgage holidays that a lot of homeowners and small businesses have taken up, the banks agreeing to defer repayments on loans, and that’s been extended now to March. Are many actually coming out of that and starting to repay their loans once again, and what’s the chance when this does end, of a lot of defaults?

Anna Bligh: Very encouragingly, banks are seeing more people coming off their loan deferrals and going back into full payments, than they, many more than they expected at this point of the cycle. At the beginning of October 45% of all of those people, whether they were businesses or mortgages, have come off their deferrals and started to pay full repayments. We haven’t crunched the October data yet, but I would expect that we’re going to see a very big increase into that, you know, well over 50%.

That still leaves a lot of people who are finding it hard to make their payments, or who might find it harder, when they’re six months is up sometime between now and next March, as you say. Banks are working individually with every customer to find the right solution. Some people are able, if they’re eligible and needed, to get a further extension of that deferral. Others are having their loans restructured. Banks have got a lot in the toolkit and the one message I want to send you today, is to anybody out there, if you’re struggling with finances, talk to your bank, don’t wait until you are in over your head.

David Speers: We’re going to get your response to, we were hearing from David Littleproud, the Deputy Nationals Leader, just a short time ago on the program. He stepped up his criticism of ANZ over its new approach on climate change with its big borrowers. The Minister says banks are there to lend money and make sure that someone can pay it back. It is not there to pass a moral compass from well-heeled CEOs and board members of their own philosophical view. Is that what the ANZ is doing?

Anna Bligh:  What ANZ is doing is what every bank in Australia is doing and in fact, just about every bank around the world. The Minister is right, banks are there to lend money into the economy but they’re also there to make sure that they lend that money with the appropriate degree of risk and the ability to manage that risk, and that’s important for all of us, because they’re lending your money, they’re lending the money out of your deposit account.

So they have to do it in a way that’s safe and that means taking account of all known risks, including climate change. There’s nothing unusual about what ANZ is doing. It’s a very prudent policy to manage the risk looking forward. Every bank is doing it, not only here, but around the world and in fact, they’re being required to do it by regulators. So ANZ has already made it very clear, they will be there to back Australian farmers, what they’re talking about here are the 100 biggest emitters and making sure that those big emitters have a transition plan as the energy market changes over the coming years.

David Speers: Anna Bligh from the Australian Banking Association. Thanks for joining us.

Anna Bligh: Thank you.

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