One in five borrowers have ghosted their bank

Opinion

Karen Maley

It’s estimated that around one in five customers who opted to defer their home loan repayments are now ghosting their bankers.

Karen MaleyColumnist

The coronavirus pandemic has of course thrown up lots of problems for business leaders, but senior bankers face a novel challenge in working out how to manage the tens of thousands of home loan borrowers who have decided to ghost them.

It’s estimated that around one in five customers who opted to defer their home loan repayments are now ghosting their bankers: they are simply refusing to respond to phone calls, texts, letters and emails from the banks.

Now, this is not an insignificant number of would-be ghosters.

According to figures provided to the Australian Prudential Regulation Authority, the banks still had about 414,430 deferred home loans – with a total value of $167 billion – on their books as at the end of July.

Even if the banks have made some progress in whittling down the number of deferred home loans, it suggests that about 80,000 home loan borrowers, who owe a little more than $30 billion, have decided that their best financial strategy is to avoid having any sort of contact with their bankers.

But while borrowers might like to fantasise about suspending their mortgage repayments indefinitely, their bankers are no longer in a position to extend this facility.

Senior bankers pointed out that although APRA has given them capital relief on deferred home loans until March next year, the prudential regulator does require banks to form a view as to whether the borrower will eventually be in a position to resume repayments.

And this means that banks need to have conversations with their customers so that they can more accurately gauge their financial situation.

Indeed, bankers say that the clear message they’re getting from APRA is that the prudential regulator doesn’t want banks to give borrowers the impression that loans will be rolled indefinitely.

So where does that leave the tens of thousands of ghosters?

One senior banker explained that people were obviously not talking to the banks in the hope that the problem might simply go away. But, he added, this situation could not continue indefinitely.

“The notes will get a little bit sharper to get a response,” he explained.

He said that was why the banks were urging customers to talk to them before their six-month home loan deferral periods ran out.

“One month after, three months after, the letters will get more severe,” he predicted.

But, he shrugged, “then, of course, we’ll get a bullying complaint”.

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Karen Maley writes on banking and finance, specialising in financial services, private equity and investment banking. Karen is based in Sydney. Connect with Karen on Twitter. Email Karen at karen.maley@afr.com

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