Hard-up home loan borrowers say finance companies are knocking back their requests for six-month loan holidays, leaving them worried they will lose their houses.
But the finance industry body says it is working with the Government to come up with liquidity support for the sector which would enable companies to do more for those in financial hardship.
Last week the Government reached an agreement with the New Zealand Bankers Association to allow retail banks to offer home loan deferrals to borrowers left in financial hardship by Covid-19.
Thousands of Kiwis have already applied for the mortgage relief that will allow them to pause on paying the principal on their loan and add the interest to their loan.
But so far borrowers of non-bank lenders have been left to negotiate arrangements with finance companies reluctant to take on more risk.
One self-employed businesswoman who didn't want to be named said she faced losing her home as she could not pay her mortgage.
"As soon as the announcement was made that we were going into shutdown I have had no work and no opportunity of getting any work until after lockdown. My businesses are based on me leaving the office and being on the road and meeting people.
"The Government has said that no one should lose their home. I am facing losing my home as I cannot pay my mortgage."
The woman said her lender, Avanti Finance, had told her they were not providing mortgage holidays as they were a finance company.
"It's hard enough being self-employed, being a small business, and now facing the likelihood of losing my home whilst everyone who has a first mortgage with a bank gets assistance - it's pretty hard to swallow."
Avanti Finance chief executive Mark Mountcastle said up until Friday it had been suspending immediate payment obligations and waiving fees and charges until the situation become clearer around how it should handle six-month deferrals and what the statutory obligations were for doing so.
"Only today [Friday] late morning was confirmation received as to how these obligations should be viewed by non-banks, which was not clear beforehand. While this guidance is helpful it appears there remains a two-level regulatory environment between banks and non-banks."
He said from Friday Avanti Finance would be discussing longer-term arrangements with customers including deferrals in cases of need.
Another home loan borrower said he had been told by his lender that it was not policy to allow loan deferrals.
The Auckland man, who ran an ice cream truck business before the lockdown, said his family was still managing to pay the loan and insurances which cost about $5000 a month but it was taking all of his wife's income and they were relying on family to pay for food.
"After her pay goes to the mortgage there is nothing left. We have stopped paying the water bill."
The man had managed to get a three-month hold put on this vehicle loan but said he feared they would lose their home, which took them eight years to save up the deposit for.
Lyn McMorran, chief executive of the Financial Services Federation, which represents the sector, said it was working with the Government to reach an arrangement for the industry to help provide liquidity.
She pointed to the deal in Australia where the Government had announced an A$15 billion stimulus investment on March 19 to enable small banks and non-banks to supply low-cost loans to customers and small business.
"That would be nice but we are not expecting it to be at that level."
In the meantime McMorran said its members were doing what they could to help people.
She said it was hard for lenders to extend support because of the uncertainty of the situation and the current funding system, which didn't allow them to have a large proportion of their borrowers in arrears.
"We don't know how long people will be in hardship, when those people will be back in work. We will do what we can."
McMorran said the sector had been left playing catch-up to the agreement made by the banks but she said didn't blame the Government as banks were systemically important and had to be prioritised first.
Reserve Bank figures show non-banks had $3.2 billion worth of housing loans on their books as of February while banks had $277 billion.
McMorran said she was hopeful an arrangement could be reached in the next week or so and she urged borrowers to be patient.
"Try again next week, things are evolving all the time."
The Herald asked for a response from the Reserve Bank and the finance minister on the situation but had not heard back as of 5pm Friday.