The number of deferred loans has plummeted since the peak of the COVID-19 pandemic earlier this year, while the value has dropped to below $100 billion.
New data from the Australian Banking Association (ABA) revealed that the number of deferred loans has fallen below 300,000, down from the peak of more than 900,000 deferred loans.
According to ABA CEO Anna Bligh, the figures demonstrate that economic recovery is gathering pace.
“This is an encouraging sign that most Australians are through the worst,” Ms Bligh said.
“Australian banks have played a major role in carrying the economic burden of the pandemic for their customers. The good news is that the majority are now bouncing back as they restart their loan repayments.”
The latest ABA data showed that total deferrals across the seven largest banks – which include the Commonwealth Bank of Australia (CBA), Westpac, ANZ, National Australia Bank (NAB), Bank of Queensland (BOQ), Suncorp and Bendigo Bank – fell from 803,281 as at 24 June to 280,158 as at 4 November, which represents a 65 per cent drop.
At the peak of the pandemic, the majority (803,000) of all deferred loans were across the seven largest banks.
The value of deferred loans by the seven largest banks has now fallen below $100 billion to $86 billion. This figure peaked at more than $250 billion in June.
Home loan deferrals by the seven largest banks are down to fewer than 145,000 from over 436,000 as at 24 June.
Total mortgage loan deferrals dropped from 493,440 as at 24 June to 169,677 as at 4 November.
Total business loan deferrals have fallen from over 228,000 as at 24 June to fewer than 73,000, while small-to-medium enterprise (SME) loan deferrals are down to 65,000 from 198,262 at 24 June.
According to Ms Bligh, the number of loans on hold is expected to fall further in the coming weeks as more borrowers reach the end of their six-month deferrals.
“It’s great to see a lower than expected number of people needing to extend their deferral period,” she said.
“Don’t wait till you are in over your head, talk to your bank. They’ll help you find a way through this. Don’t tough it out on your own,” she advised.
Recent September figures from the Australian Prudential Regulation Authority revealed that the pace of borrowers exiting deferrals increased significantly, with only 6.7 per cent of all loans still affected.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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