Westpac offers its support to Earthquake victims

Westpac’s announcement to brokers yesterday will be very much appreciated and will certainly be of help to some clients.
The Christchurch earthquake last Tuesday as you know has been a significant natural disaster.

Westpac’s top priority has been the well being of those affected and we are truly committed to supporting our employees, our valued business partners, customers, and the community in Christchurch.

Westpac has financial relief packages available to assist customers impacted by the Christchurch earthquake which include:

Personal Customers

Access to an emergency overdraft facility for a 45-day term at a special interest rate of 5%, with a further 45-day term if required, under the same terms and conditions. All establishment fees will be waived.
A 90-day mortgage repayment holiday (please note that interest will continue to be added to the loan for the repayment holiday period)
No early repayment costs for customers who have had a home destroyed or have suffered major damage as a result of the earthquake and wish to repay their fixed rate home loan
No adjustment fees for customers wanting to restructure a home loan as a result of the earthquake

Business Customers

For small business customers impacted by the earthquake – access to a temporary overdraft facility of $20,000 for up to 90-days at a special interest rate of 5%, with no application fees or penalty interest to apply
For commercial/corporate/agribusiness customers – access to a temporary overdraft facility of $500,000 for up to 90-days at a special interest rate of 5%, with no application fees or penalty interest to apply
For commercial/corporate/agribusiness customers – a waiver of early withdrawal costs for term deposits
Westpac would like to acknowledge the well wishes and enquiries we have received from many of you in regards the welfare of our staff in Canterbury, it has been truly heartwarming and most appreciated by the team.


Christchurch Earthquake and bank penalty policy

The Earthquake in Christchurch has caused devastation not only to the city and its citizens but to our country as a whole. As New Zealand and the world watch and wait for hope, our thoughts turn to Canterbrians, to the loss of their homes and the destruction they are faced with.

In every situation where a mortgage is placed on a property, the lending will not advance the funds to purchase the house without evidence of house insurance being in place and the lender noted as having an interest in the property. If EQC are going to condemn a house and not allow residents to move back in, that would normally result in a payout on the insurance. Whenever there is a lender noted as having a mortgage on the property the cheque would go to the lender to repay that funds off the mortgage. This is all fine and most of us would want the mortgage repaid.

My concern came when I realised that many clients still have fixed rate mortgages. I have only ever in all of my years in finance known of the fixed rate penalty being waived on one occasion. This was in fact due to EQC paying out becuase the property was condemned due to a landslide. The lender was going to impose the penalty until we intervened on behalf of the client and appealed to their common sense.

We have been in touch with lenders to ask this very question now, and I am absolutely delighted that both ASB and Sovereign have confirmed that they would not charge break costs on receipt of the EQC payout.
Their email goes on to state…
“”We have also decided that when the loan is re-established, after the property has been repaired, we will re-instate the loan at the original rate if that is what the customer wishes to happen. These principles also apply if we receive interim payouts from the customer’s general insurer.
The policy applies to both ASB and Sovereign.””

Well done ASB and Sovereign. It is really great that they lenders have appreciated that rules should sometimes be broken. We all understand that when we sign fixed rates agreements, it is a contract, but sometimes contracts have to be broken, and common sense should prevail.
We do expect to hear from Westpac and trust they have taken the same view.