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The Government has announced a six-month mortgage holiday for those whose incomes have been affected by Covid-19.
The Finance Minister Grant Robertson and Prime Minister Jacinda Ardern this afternoon gave an update on Covid-19 as the country prepares to go into lockdown at 11.59pm on Wednesday.
There are now 155 confirmed or probable cases in New Zealand, 12 of whom have recovered. Six are in hospital but have not needed ICU treatment.
The Government, retail banks and the Reserve Bank announced a major financial support package for home owners and businesses affected.
The $6.25 billion Business Finance Guarantee Scheme will provide short-term credit to cushion the financial distress on solvent small and medium-sized firms affected by the Covid-19 crisis.
The package will include a six-month principal and interest payment holiday for mortgage holders and SME customers whose incomes have been affected by the economic disruption from Covid-19.
The scheme will include a limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years and expected to be provided by the banks at competitive, transparent rates.
The Government will carry 80% of the credit risk, with the other 20% to be carried by the banks.
"We are acting quickly to get these schemes in place to cushion the impact on New Zealanders and businesses from this global pandemic," said Robertson.
"These actions between the Government, banks and the Reserve Bank show how we are all uniting against Covid-19. We will get through this if we all continue to work together.
"A six-month mortgage holiday for people whose incomes have been affected by Covid-19 will mean people won't lose their homes as a result of the economic disruption caused by this virus."
The specific details of the initiative are being finalised and agreed urgently and banks will make these public in the coming days.
The Reserve Bank has agreed to help banks put this in place with appropriate capital rules. In addition, it has decided to reduce banks 'core funding ratios' from 75% to 50% further helping banks to make credit available.
Reserve Bank Governor Adrian Orr, said: "Banks remain well capitalised and liquid. They also remain highly connected to New Zealand's business sector and almost every household in New Zealand.
"Their ability to extend credit to firms to bridge the difficult times created by COVID-19 is critical and made more possible with today's announcements. We will monitor banks' behaviour over coming months to assess the effectiveness of the risk-sharing scheme."
The Government, Reserve Bank and the Treasury continue to work on further tailor-made support for larger, more complex businesses, Robertson said.