The non-bank lender has announced that it has extended its commitment on trailing commission payments to brokers for borrowers affected by COVID-19.
In March of this year, Pepper Money was the first lender to announce that it continue to honor all track payments for customers affected by the coronavirus pandemic until at least December 31, whether or not a customer is in difficulty (terms and conditions apply).
According to Pepper, the move, which affected both mortgages and commercial loans, was taken to “ensure brokers are not equally affected in these difficult times.”
The lender has now announced that it will extend its commitment to honor all follow-up payments for customers affected by COVID-19 for an additional 12 months, until at least December 31, 2021.
He will reconsider this position after that date, Pepper Money added.
Commenting on the extension, Pepper Money Mortgage Managing Director Aaron Milburn said, “Pepper Money was proudly the first lender to support the Broker Channel with this pledge in March of this year.
“By extending the deadline today, we are providing brokers with the support and certainty they need beyond 2020 and well into 2021.”
Recent data from the Australian Prudential Regulation Authority (APRA) showed that loan deferral outflows have accelerated, with figures for September showing that only 6.7 percent of all loans are still impacted, while the volume of loans held by approved depository institutions (ADI) fell for the third consecutive month.
According to the Australian Bureau of Statistics (ABS), in October, 7 percent of all businesses reported postponing loan repayments, down from 16% of businesses in May.
A range of other lenders confirmed in March that they would continue to pay follow-up fees to brokers whose clients chose to defer loan repayments under COVID-19 support programs, as questions were raised about how the Trailing commissions would be processed under these agreements.
The Westpac Group (comprising Westpac, BankSA, Bank of Melbourne and St. George Bank) has confirmed that it will continue to pay the trail to brokers as part of their hardship packages, while Auswide said it will continue to honor track payments on loans under six- month deferral agreements, and Adelaide Bank said it would continue to pay brokers for deferred repayment loans.
The Bank of Queensland and Virgin Money have also said they will continue to pay a trailing commission to brokers when a customer accesses relief due to COVID-19.
The lenders’ announcement followed a statement by APRA that banks should not treat repayment holidays as arrears, comments from credit reporting agencies that hardship agreements are generally not reported as defaults, and a support message from the Australian Banking Association.
Malavika Santhebennur is the Mortgage Securities Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.