Australian banks start asking for loan repayments after six-month virus grace period

By Byron Kaye

SYDNEY (Reuters) – Australia’s banks said on Monday they have started asking customers to pay back loans after giving them a six month hiatus due to the coronavirus, prompting concerns some borrowers will be forced to sell their homes once government support ends.

The Australian Banking Association (ABA), a lobby group, said its members had started contacting holders of 260,000 mortgages and 105,000 business loans to check if they could resume payments once deferrals expired in September and October.

Australian lenders have deferred A$274 billion ($200 billion) worth of loans, according to a financial regulator, as the economy has fallen into technical recession and the jobless rate has hit its highest levels since the 1990s.

“Those who can resume repayments at the end of their deferral will be required to do so,” said the ABA in a statement.

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