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The Australian Banking Association (ABA) has announced that it will extend the loan repayment deferral period by another four months for customers experiencing sustained financial difficulty.

Households and small businesses who reach the end of the first six-month deferral period and can begin to repay their loans will be required to do so. 

However, those that are still experiencing financial difficulty and reduced incomes will be contacted as they approach the end of the deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan. 

Those without these arrangements in place at the end of the six-month deferral will be eligible for an extension of up to four months. 

ABA CEO Anna Bligh said that the best course of action is to resume repayments as soon as possible. 

"Those who are able to repay their loans will resume doing so, which is in the best interests of those customers and allows support to be directed to those who need it.

"Encouragingly, many customers have already chosen to resume making repayments," she said. 

The ABA has stressed that the extension will not be automatic and will only be given to those who genuinely need extra time. 

"Many customers may need less than four months to either restructure their loan or get back into full repayments," the ABA said.

"Banks will work with customers to find the best options to restructure or vary their loan." 

According to the ABA, more than 800,000 Australians have deferred their repayments during the crisis. 

Bligh added that the banks have ramped up their support. 

"To meet demand, banks have deployed over 5000 extra frontline staff who will proactively contact and work with customers to find the right solution. 

"This next phase of bank support will avoid a ‘cliff’ for customers in September and give them the breathing space they need to work with their bank and get back on their feet financially.

"Australia’s banks supported their customers as the country entered the COVID-19 crisis and they are determined to support their customers on the way out of the crisis," she said. 

For customers who recommence repayments on their existing loan or enter into a new repayment arrangement, their credit report will not be impacted, provided they meet the new repayment arrangements.

Similarly, those who are granted an extended deferral period will not have their credit report impacted.

 

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