Kiwibank joins Westpac and TSB in offering interest-free emergency loans to flood victims

Thursday, 16 February 2023

Emergency loans are on offer from banks to flood victims.

Kiwibank has joined Westpac and TSB in offering interest-free loans to flood and cyclone victims.

All banks have released emergency financial support for customers, including letting flood victims with home loans temporarily put their repayments on hold.

But TSB is now offering 90-day $500 emergency interest-free loans to customers hit hard by extreme weather, while Westpac is offering up to $5000 interest-free for up to 90 days.

They have now been joined by Kiwibank, which says it will offer short-term interest-free emergency loans to flood and cyclone victims on a case-by-case basis.

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Slips close SH1 at Brynderwyn Hill and flooding persists along SH14 in Tangiteroria after Cyclone Gabrielle brought intense rain. (First published 16 February)

On Tuesday, the Government passed regulations, so banks could make emergency loans to flood and cyclone victims without doing time-consuming affordability checks, but Commerce and Consumer Affairs Minister Duncan Webb has asked banks to charge low interest on these emergency loans.

“I have asked the banking sector for assurances that interest rates will be at usual or possibly lower rates, Webb said.

“So far the response has been positive with one bank indicating their overdrafts will be interest-free,” he said.

‘I would encourage people who have been affected by flooding and for whom other support is not available or not adequate for their needs to check with their lender to see what support or temporary lending options are available to them,’ says Duncan Webb, commerce and consumer affairs.

ANZ, ASB, and Bank of New Zealand are all offering emergency overdrafts to flood and cyclone, but none have yet pledged they will be interest-free.

Normal overdraft rates from banks vary, but ANZ charges 18.9% interest on its overdrafts, as long as people remain within their overdraft limit, while Westpac usually charges 19.95%.

The regulations Webb has announced allow banks and other mortgage lenders to extend people’s home loans by up to $10,000 without having to do affordability assessments.

The regulations also allow banks to extend emergency overdrafts of up to $10,000 to existing customers who are victims of extreme weather events in January and February without having to first do affordability assessments.

Only loan applications from people who are “experiencing, or reasonably expect to experience” negative effects from the flooding or other weather-related damage in the upper North Island in January and February 2023 are covered by the regulations.

Westpac NZ chief executive Catherine McGrath said the Government’s move gave banks an additional tool to support customers.

“When disaster hits, affected customers sometimes need that extra helping hand to get them through, and with so much going on their lives they don’t have capacity to go through a full lending application,” she said.

“We are offering the temporary overdraft at 0% interest for the first 45 days, with the possibility of extending this period a further 45 days, and there are no establishment fees in setting it up.”

Westpac customers without home loans could apply for a temporary overdraft of up to $2000, while those who have a mortgage could apply for up to $5000.

The emergency loan regulations will remain in place until the end of March and apply to customers in Northland, Auckland, Waikato and the Bay of Plenty.

Other regions affected by the cyclone, such as the eastern coast of the North Island, are expected to be eligible for the same support from early next week, Westpac said.