PHOTO: STUFF Stubbs estimated banks would make an extra $10,000 for an average borrower taking a mortgage holiday.
New Zealanders opting for mortgage holidays are creating a windfall for the banks, one KiwiSaver provider says.
At mid-May, banks had reported granting payment reductions or deferrals on 13 per cent by value of total household lending, Reserve Bank data showed.
People who have experienced an income drop because of Covid-19 can apply for a mortgage holiday of up to six months. During that time they do not make their normal repayments but interest still accrues. Customers either pay that back by increasing their payments after the holiday finishes, or extending the terms of their loans.
Sam Stubbs, founder of KiwiSaver provider Simplicity, said banks would make $9.73 billion a year in interest from the $278 billion of outstanding home mortgages if all had an interest rate of 3.5 per cent.
It is likely that some of that lending will be on higher rates.
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