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Westpac is looking to make life a little easier for financially distressed customers by introducing a savings buffer to its existing suite of mortgage products.
The measure promises to give customers undergoing hardship additional breathing room when it comes to their monthly finances.
According to Westpac, their team of consultants will work with customers to determine the amount they can free up within their budget to create a savings buffer, potentially via waiving fees, deferring repayments or reducing the interest rate of a customer’s debt.
“While most customers have resumed mortgage repayments following deferrals at the start of the COVID-19 pandemic, there are around 4,500 accounts where individuals and families require more tailored and flexible support to get back on their feet,” Westpac director, customer vulnerability and financial resilience Catherine Fitzpatrick said.
“After meeting their monthly expenses, we have found some customers have no income left to prepare for life events like medical emergencies, fixing a household appliance or a car breakdown.
“The savings buffer is designed to help customers in severe financial stress keep their heads above water.”
Although the program is currently only in a pilot stage, Westpac said they expect that the savings buffer could net customers at least an extra $100 of savings per month.
The move has been welcomed by advocacy groups like Good Shepherd.
“It is critical that we continue to develop and invest in safe, fair and affordable lending options to alleviate some of the pressure on those experiencing adversity, without burdening them with long-term debt that is difficult to repay,” said Good Shepherd chief executive Stella Avramopoulos.
According to Financial Counselling Australia CEO Fiona Guthrie, “When creditors expect every single cent of a person’s uncommitted income to go toward repaying debt, all they are doing is setting people up to fail.
“This is a really sensible initiative from Westpac, and we hope other banks will follow suit.”