The Australian Banking Association announced a range of measures by the nation’s leading financial institutions on Friday as part of the response to the economic crisis caused by the COVID-19.
The measures follow an $80 billion pledge by the RBA to buy government bonds to support the banks in lending to small and medium business. The government has also promised $15 billion for smaller and non-bank lenders to also support SMEs.
In response, Australia’s Big 4 banks have announced a range of support measures for both business and personal customers over the next six months. Here’s what they’re offering.
The CBA’s response includes
- 1% interest rate reduction for all existing cash-linked small business loans
- 0.7% interest rate reduction in one, two and three year fixed home loan rates for owner occupiers paying principal and interest to 2.29% p.a.
- 0.6% increase in 12-month term deposits to 1.70% p.a.
- Changes to home loan repayments, which the bank says will release up to $3.6 bn in cash for Australian households
CEO Matt Comyn said: “Small businesses will benefit from an interest rate reduction of 100 bps on all business loans linked to the cash rate. This is in addition to a range of measures announced last week which are available for businesses facing difficulty including waiving merchant fees, waiving redraw fees, waiving early redraw fees on business term deposit accounts, and deferring repayments on vehicle and equipment finance loans,”
For small businesses
- Reducing rates on business loans by 100 bps. This is in addition to the 25 bps reduction announced on 3rd March, and will come into effect on 3 April
- Supporting the RBA’s new term funding facility, which incentivises lending to businesses.
- Continuing to offer a range of measures to provide further assistance to customers facing financial hardship, including
- Waiving merchant terminal fees
- Waiving redraw fees
- Waiving early redraw fees on business term deposit accounts (including Farm Management Deposit accounts)
- Waiving establishment fees and excess interest on Temporary Excess products
- Deferring repayments on vehicle and equipment finance loans, and providing tailored restructuring options that meet individual customer needs
For personal customers
- Increasing 12 month term deposit rates by 60 bps to 1.70% p.a. This allows all Australians – and especially older Australians who rely on their savings income – to earn a guaranteed return which is 1.45% above the cash rate. This offer is available for all eligible new and existing CBA personal* customers, available from the 20th March 2020 on balances from $5,000 to $2 million, for a limited time only.
- Offering a 2.29% p.a. fixed rate home loan for one, two and three years – our lowest advertised rate ever – allowing owner occupier customers on principal and interest repayments with a Wealth Package to lock in certainty of these historically low interest rates, from 30 March.
- Reducing repayments for all variable principal and interest home loan accounts to the minimum required from 1 May to release up to $3.6bn of additional cash flow for Australian households. Customers who wish to retain their existing repayments will have the ability to opt out from 1 May.
- Increasing eligibility criteria for personal overdrafts, available online or through the CommBank App, helping customers access emergency funds.
*Not available for Business, Corporate, Institutional, Government customers or Trusts
For small businesses
- 2% reduction on overdrafts for new and existing customers, effective Monday 6 April 2020.
- 1% interest rate reduction for small business cash-based loans, effective Monday 6 April 2020.
- Repayment relief: Westpac small business customers can defer principal and interest repayments of business term loans for up to six months.
- Merchant terminal rental fee waivers for up to three months.
- No establishment fees for equipment finance loans until the end of June 2020.
- Additional help already available to small business customers impacted by recent disasters
- Deferred payments for Business credit cards for a period of at least three months
- Fee free redraw
- Restructuring and consolidating loans
- Termination of a term deposit without the interest rate adjustment
For home loan customers
- Reduced Fixed Home Loan Rates: A 2.29% p.a. fixed rate home loan for one, two and three years for owner occupied customers on principal and interest repayments with a Premier Advantage Package, effective Friday 27 March.
- Repayment relief for home loan customers: Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact the bank for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
For deposit and transaction account customers
- Term Deposit special offer of 1.7% p.a. interest for 12 months for all Australians: special rate with interest paid monthly to provide customers with a higher return on their savings (up to $500,000 per customer). Available online and in-branch.
- For Australians aged 65 years and over the rate will be 2% p.a. for eight months (up to $500,000 per customer). Effective Friday 27 March. Customers can choose to have interest paid monthly to provide them with regular income.
ANZ says its package has the potential to inject $6 billion into the economy. The package includes a reduction of some fixed-rates of 0.80%pa on new loans for small business and 0.49%pa for home loan customers, as well as a reduction of variable small business rates of 0.25%pa and variable home loan rates of 0.15%pa.
ANZ CEO Shayne Elliott said: “Our decision to reduce variable home loan and small business rates is the right thing to do for our existing customers, particularly the significant number of our home loan customers who are self-employed and managing the effects of the COVID-19 crisis on their own businesses.”
Small & Medium Businesses
- Decrease variable interest small business loan rates in Australia by 0.25%pa, effective from 27 March 2020, resulting in a 0.50%pa reduction since last week.
- All impacted customers can request a six-month payment deferral on loan repayments for term loans, with interest capitalised.
- Making available temporary increases in overdraft facilities for 12 months.
- A reduction by 0.80% pa to a new two and three-year fixed rate of 2.59% pa for secured small business loans up to $1 million, effective 3 April 2020.
The six-month payment support is available to all ANZ’s small and medium business customers. For a customer with $1m in lending, the support equates to $40-$50k of working capital. If all ANZ’s small and medium customers were to take up the offer of a payment deferral, more than $2.5 billion would be freed-up for businesses to continue operating and employing staff during this time. ANZ will also provide an option of a temporary increase in overdraft facilities for 12 months.
Home Loan Customers
ANZ is offering financial support to home loan customers impacted by COVID-19. This can include deferring home loan repayments for six months. Under a home loan repayment deferral, customers do not need to make repayments to their home loan for a period of time. Unpaid interest during this period is capitalised, meaning it is added to the customer’s outstanding loan balance to be paid over the remaining loan term.
- Decrease variable interest home loan rates in Australia by 0.15% pa across all Variable rate indices, effective from 27 March 2020.
- Introduction of a two-year fixed rate of 2.19%pa for Owner Occupiers paying Principal & Interest; our lowest fixed-rate home loan on-record.
- Request a deferral of home loan repayments for up to six-months, with a review at three-months, with interest capitalised.
Current Standard Variable Home Loan Rates
- For Standard Variable Rate Owner Occupiers paying Principal & Interest, the Index Rate will decrease by 0.15% to 4.39% pa.
- For Standard Variable Rate Investors paying Principal & Interest the Index Rate will decrease by 0.15% pa to 4.99% pa.
- For Standard Variable Rate Owner Occupiers paying Interest Only the Index Rate will decrease by 0.15% pa to 4.94% pa.
- For Standard Variable Rate Investors paying Interest Only the Index Rate will decrease by 0.15% pa to 5.24% pa.
More information is available on ANZ’s dedicated site
NAB business customers
will be able to:
- Defer principal and interest for up to six months on a range of business loans including floating and variable rates, and equipment finance loans
- Receive a 200-basis point rate cut on QuickBiz loans and overdrafts, effective March 30
- Receive an additional 100-basis point reduction on variable rates for small business loans, effective March 30. This is on top of a 25-bps reduction earlier this month
- Access up to $65 billion of additional secured limits to pre-assessed customers, with $7 billion currently available for fast assessment process
- Access up to $9 billion in additional limits for unsecured lending for existing customers via QuickBiz and
- Defer business credit card repayments
- Request merchant terminal (including HICAPS) fees are waived for up to 6 months.
NAB home loan customers
will be able to:
- Defer home loan repayments for up to six months, including a three-month checkpoint with the bank. For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month.
For larger business customers, NAB is committed to finding appropriate support on a case by case basis.
Business customers experiencing financial hardship are invited to speak to their NAB banker or contact our team on 13 10 12, Monday to Friday 8am – 8pm or on weekends 9am – 6pm (AEST/AEDT).