Australia’s mortgage cliff shrinks to $133 billion

The Australian Prudential Regulatory Authority (APRA) on Friday updated its loan deferrals data to September 2020, which revealed that there were still $179 billion loans outstanding as at 30 September, accounting for 6.7% of total loans outstanding by value:

 

The volume of deferred mortgages was $133 billion in September, accounting for 7.4% of total housing loans outstanding by value. This was down from a peak of $192 billion in May (11% of outstanding mortgages).

In number terms, 324,894 mortgages were deferred as at 30 September, accounting for 6% of total mortgage facilities. This was down 68,573 from September (when 393,467 mortgages were deferred) and down 163,355 from May’s peak when 488,249 mortgages were deferred (accounting for 9% of mortgage facilities).

In fact, the share of mortgages deferred in September (7.4% by value) was the lowest its been since the beginning of the pandemic:

APRA has permitted banks to extend mortgage repayment relief until March 2021.

It will be interesting to see what happens when the various emergency income supports – e.g. JobKeeper and the JobSeeker supplement, as well as early access to superannuation – are unwound over the next six months.

Unconventional Economist
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Comments

  1. 7.4% of housing loans is still about half of the original figure. That is not a good outcome.
    I’m interested to know if ‘no longer deferred’ actually means that they are paying. Could ‘no longer deferred’ also include those that have been restructured to only include partial payment or put into some other hardship category. would not be surprised if the banks are engaging in some creating accounting here.

    • C Diminished Chord

      They have been very public about this being the case. They have also said they will basically keep everyone in their family home – whatever that means, I suspect the $200 Billion US Fed > RBA > Big 4 line of of credit is at play here.

      7.4% represents to me investors with no chance of repaying on investment properties only. Even then I suspect they wont bankrupt them but sell them to the bank to close out the loan and leave the investor with what they can afford.

  2. Display NameMEMBER

    How many of the “fixed” deferrals (delta between 192B and 133B) are now interest only, longer term, …?
    Has it really been fixed? I am guessing a good percentage of can kicking

  3. 7.4% deferred with another $60b on some creative bank package to give them time. Still not terrible and unlikely to cause huge swathes of panic selling. My bigger concern is that consumption dries up post cash splash and businesses that were doing okay start to struggle and wind down. This could be a very long burn though, dont expect to see massive weekly price falls, more of a slow grind.

    • C Diminished Chord

      I think what people are missing is that anyone who falls “remotely” into this category, is saved by the bank “buying” their bankrupt position with the RBA $200 Billion line of credit etc is that these people are NO LONGER IN THE MARKET.

      Its a huge contraction in the market of buyers.

      I look at West Geelong region – there have been probably close to a hundred properties listed where I look in the last few months and 4 have sold since April.

      Despite that if you have painted a house in Geelong which you bought in 20015 for $300k it is now definitely – with paint – worth $700-$900k – if you add a porch in you can ask for a million – especially with tiles.

      Only proviso is that you are not allowed to have any colour what so ever in your house – anywhere at all – only muted shades.

      • There is a lot of wealth still sloshing around though. The demographic you are referring to were always the edge case so them leaving the market is not the issue. If the cashed up and asset rich boomers leave the market then that is another story. $7T of home value in Australia, $105B in cash, $600B in investments which are relatively liquid. If people with money/liquid assets see a deal in housing they will likely soak up the spare capacity

  4. Anecdata:

    We exchanged on a place at Glossodia on the weekend as FHB. It had sold for full asking price 2 weeks previously, before the buyer pulled out on the Friday just gone. Agent then rang around everyone who had expressed interest, including me (I had heard nothing back since my initial enquiry 2 weeks ago. Turns out it sold on the first open home, hence why my inquiry wasn’t replied to).

    We went out to the open home next day. Six parties in total attended including us.

    Within 30 minutes of leaving we offered full asking and owner said yes. While on the way to the office to sign, two other parties offered full asking and two more left voicemails asking for the agent to call them ‘urgently’.

    Owner said “first to sign I’m happy with”, and we were the first there. Second party arrived some time later, before agent had arrived, and offered $11k more. Cue impromptu auction over phone and SMS.

    In the end we got it but paid $26k over asking due to the strong demand. There are zero rental vacancies in that suburb or any of the suburbs around it.

    • C Diminished Chord

      There are heaps of rentals around there – its a population of 2,000 70 kms from Sydney- basically a small country town- 22 rentals listed on Domain which is HUGE for such a remote out of the way place.

      I don’t really believe you were privy to the information and it sounds like spruik from the agent and quite frankly based on that, and your rental claims – you sound desperate to justify buying a house on the precipice of the single greatest economic collapse in modern human history.

      Well done to you – smart money. Could’ve waited till mid next year and pocketed half the price but you were clearly “keen” and wanted to “beat” those other buyers – and as you would say – if its your home you can’t lose ! (Except half the purchase price obviously, which translates to about a million bucks over the course of your life).

      • The specific claim he made was that his agency had none, which appeared to be true. Apologies, that’s not what my comment said. Too late to edit it now.

        My circumstances were a bit unique in that we couldn’t really wait until next year, but thanks for the smarmy attitude.

          • Thanks Swampy. Living in Sydney I’ve been a hardcore “this is a massive bubble” person since before the GFC. On an AU forum I frequent (performance forum related with a dot-com address, in case anyone here is a member) I’ve seen disbelief at the size and duration of the bubble as far back as 2001.

            I bought now because we hit 10% of what we wanted in Sydney and because my savings rate got smashed due to a change in circumstance ( I can smash the loan but I can’t smash a deposit while paying rent. Hence it was now or never.)

  5. The Penske FileMEMBER

    Do these figures via APRA include the 2nd tier players like Liberty, La Trobe, Pepper et al? I’m not sure if APRA can get the data from non ADIs via the warehouse providers. These groups are actually calling up their borrowers now and on the back of record settlements for these groups over the past few years surely there’s some pain there for prices. Mostly low doc (self employed) borrowers as well.

  6. ErmingtonPlumbingMEMBER

    “It will be interesting to see what happens when the various emergency income supports – e.g. JobKeeper and the JobSeeker supplement, as well as early access to superannuation – are unwound over the next six months”

    Large scale Construction layoffs are coming to early next year too.

    • Sydney and Melbourne need to just allow townhouse construction up to three storeys (including a nice rooftop deck) for all land up to 10km from the CBD, no exceptions. That will get housing booming.

      Then let in 1 million Hong Kongers.

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