NAB is going to question borrowers with loan holidays

National Australia Bank Ltd (ASX:NAB) is going to check in on borrowers which have mortgage holidays, what does this mean?

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National Australia Bank Ltd (ASX: NAB) is going to check in on borrowers which have loan holidays.

According to reporting by The Australian, NAB is going to start contacting the 80,000 borrowers who applied for a mortgage holiday to check if they can begin making repayments.

Initially these checks were meant to only come in at the three month mark, which is what Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have agreed to.

What is the bank actually going to check?

Apparently NAB will discuss the current status of the borrower's loan, what the repayment pause will mean for the plan and what the borrower's plans are for the next few months during the coronavirus period.

There is a lot of economic pain out there. There's a reason why huge numbers of people are on jobseeker or jobkeeper.

According to the stats, over the past week banks have approved another 60,000 requests for loan deferrals from customers. That brings the total to 703,000 loans to $211 billion, including business loans.

It would be a good thing for NAB if it can start those loan repayments again in these uncertain times. 

Is the NAB share price a buy?

The NAB share price is down 45% since 21 February 2020. In a few years' time this price may prove to be cheap. But at this stage it's very hard to know how much damage NAB is facing over the next 12 months. It was the only bank to pay a dividend out of the big four ASX banks which recently reported. But it is the only bank to do a capital raising so far, at a dilutive discount. It might have been better to defer the dividend like ANZ and Westpac did. 

I don't like to invest with that much uncertainty when there is a large potential downside. I prefer less 'risky' bets, though that's obviously why NAB shares are down so much to begin with.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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