A growing number of home loan borrowers are ghosting their bankers in an attempt to make their financial problems go away; simply refusing to respond to calls, emails, texts or letters.

Figures from the Australian Prudential Regulation Authority shows that banks had around 414,430 deferred home loans at the end of July. With one in five customers who opted to defer their home loan repayments deciding to ghost their banks – that’s a significant number of ghosters!

Based on these numbers, bankers are faced with the task of managing 80,000 ghosters owing roughly $30 billion.

APRA has given bankers capital relief on deferred home loans until March next year, however will eventually require banks to inform them on whether the borrower can resume repayments. 

While it’s tempting for home loan borrowers to play ostrich and hide their heads in the sand, it’s hardly the best financial strategy. 

Instead they should be getting back to their banks and having a conversation to find the best possible solution.

One option that clients have is to find someone who can negotiate on their behalf – such as Sydney-based debt negotiation business ChapterTwo Holdings, a business built around negotiation directly with banks on behalf of their clients. 

According to Jimmie Wong, Executive Chairman of Credit Intelligence (ASX:CI1) which owns 60% of ChapterTwo, the economic conditions that Australia is experiencing now is the first major disruption to the economy in many decades. Many people do not know how to adjust and adapt to living in a recession. 

Perhaps this is why home loan borrowers are reacting to their economic struggles by pretending they do not exist. 

Mr Wong speaks from experience when he says that when economies take a turn for the worse, more people will require the type of financial solutions that Credit Intelligence provides through Chapter Two.

In its FY20 financial results Credit Intelligence (ASX:CI1) already showed exceptional revenue growth of 125% and an even stronger 384% rise in NPAT. Impressive as these numbers are, the difficult COVID-19 related conditions are not yet reflected in CI1’s business activity, partly because many of the support measures designed to keep businesses and individuals active during the pandemic remain in place. We will need to wait and see what will happen with the increase in loan deferrals and potential ghosters. To be the first to know about Credit Intelligence updates and news, please click here to subscribe on their investor portal. 

Reach Markets have been engaged by CI1 to assist with private investor management.

Sources:

• One in five borrowers have ghosted their bank
• Credit Intelligence Limited, June 2020, Investor Presentation
• Reserve Bank of Australia, June 2020, Household Sector
• Roy Morgan, May 2020, 2.16 million Australians (15.3% of the workforce) out of work in April