24 Mar 2020

Covid-19 lockdown: Mortgage repayment holiday, more business financial help revealed

From Checkpoint, 5:10 pm on 24 March 2020

The government has brokered a deal with banks in a bid to keep roofs over homeowners' heads.

There will be six-month mortgage holidays for people whose incomes have been hit by Covid-19.

The banks and government also unveiled a $6.25 billion safety net for small to medium business - basically a credit life-line aimed at protecting jobs and keeping business doors open long term.

Loans will be capped at $500,000 over three years and interest will apply.

The government will also shoulder 80 percent of the credit risk.

“As people have been losing their jobs, going down to reduced hours, having reduced incomes, there’s a lot of pressure around those mortgage payments,” Finance Minister Grant Robertson told Checkpoint

“We’ve worked really hard with the banks on this over the last few days and I thank them for their work. They’re now having to get the systems set up, so those detailed arrangements for each individual bank will be out within days. 

“Please if you’re a mortgage holder don’t bombard your bank. Wait to see when they come out with the details and contact them then.” 

The government has also announced the $6.25 billion finance guarantee scheme for small to medium businesses, and the government will take 80 percent of the risk. 

“What we’re talking about here are businesses that are solvent, businesses that have been viable up until this point, but are facing the significant headwinds. We want those business and the workers that are within them to make sure they can keep their jobs and keep their incomes.

“If you look around the world you’ll see that this is what governments everywhere are doing. This is the rainy day. And the really important thing for New Zealanders… is that we came into this with 19.5 percent debt to GDP ratio - that’s one of the lowest in the developed world. 

“That means we’ve got room on our balance sheet to be able to do this. Of course it’s not limitless… [But] we’re in this position now to be able to do this, and yes we’re stretching out the balance sheet but we’re doing it for the good of New Zealand.”