BNZ last of the big banks to offer interest-free emergency loans to cyclone victims
Friday, 17 February 2023
Bank of New Zealand has become the last of the big banks to offer interest-free overdrafts to customers who are in desperate need of money as a result of the flooding and cyclone.
Westpac and TSB were the first of the big-name banks to offer short-term, interest-free loans to flood and cyclone victims as part of their emergency financial relief packages for their customers.
They were followed by Kiwibank on Thursday, and ANZ on Friday.
ASB announced on Friday it was offering overdrafts at 0.01% interest, only charging that much because the bank’s systems were not set up enable interest-free loans.
**READ MORE:
* Kiwibank joins Westpac and TSB in offering interest-free emergency loans to flood victims
* Emergency move to relax lending laws for flood, cyclone victims
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All banks have released emergency financial support for customers, including letting flood victims with home loans temporarily put their repayments on hold.
ASB also made $2000 payments to customers whose homes were red or yellow-stickered.
The offers of interest-free overdrafts, which can be as high as $10,000 for people with home loans at their banks, followed a call from Commerce and Consumer Affairs Minister Duncan Webb.
On Tuesday, the Government passed regulations, so banks could make emergency loans to flood and cyclone victims without doing time-consuming affordability checks, but 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.
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 are covered by the regulations.
BNZ chief executive Dan Huggins, said: “We recognise the hardship caused by Cyclone Gabrielle and the recent flooding in the upper north island, and we are committed to supporting our customers during these difficult times.
“To assist those impacted, we are offering interest-free overdrafts to affected customers depending on their circumstances. These will be available to help cover immediate expenses and alleviate some of the financial burdens caused by this recent event and assist our customers in getting back on their feet.”
The Government’s emergency loan regulations will remain in place until the end of March and apply to customers in Northland, Auckland, Waikato and Bay of Plenty.
Other regions affected by the cyclone, such as the east coast of the North Island, are expected to be eligible for the same support from early next week, Westpac said.