ANZ latest bank to offer interest-free overdrafts to flood/cyclone victims, while ASB will charge just 0.01%

Friday, 17 February 2023

Drone video shows the damage Cyclone Gabrielle unleashed on the West Auckland settlement of Karekare.

ANZ has become the latest bank to offer short-term, interest-free loans to flood and cyclone victims.

Westpac, TSB and Kiwibank all announced on Thursday they would offer interest-free loans or overdrafts to people struggling in the aftermath of Cyclone Gabrielle.

ASB announced on Friday it was now offering overdrafts at 0.01% interest, only charging that much because the bank’s systems are not set up enable interest-free loans.

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

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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 on Thursday.

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

That bank was Westpac, though TSB was already offering 90-day $500 emergency interest-free loans to customers hit hard by the extreme weather that has best the country in the past three weeks.

Westpac is offering up to $5000 interest-free for up to 90 days.

Kiwibank announced it would follow suit on Thursday afternoon.

An ANZ spokesperson said it was offering interest-free, temporary overdrafts to personal customers affected by the floods and cyclone on a case-by-case basis.

Customers could apply for an interest-free, temporary overdraft of up to $2000, rising to $10,000 for home loan customers with evidence they have lodged an insurance claim.

Duncan Webb has urged banks to make emergency loans to flood and cyclone victims below their normal lending rates.

“Each application will be considered on a case-by-case basis, as some conditions apply, so we encourage impacted customers to contact us, and we will work through the best solution for them,” the spokesperson said.

ASB said it was offering its customers affected by flooding and cyclone a 12-month overdraft at 0.01% interest. Those with home loans could get an overdraft of up to $5000, while others could get up to $2000.

The move comes after ASB pledged to give $2000 to each of its customers whose homes have been red or yellow-stickered, which had delivered more than $1 million dollars into customers’ accounts.

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.

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.