Mortgage cliff no longer a systemic threat

The Australian Bankers Association (ABA) has provided an update on its members deferred loans, which shows that the mortgage cliff that was towering over Australia’s property market has shrunk by two-thirds from its peak in June:

According to the latest data up to November 4, home loan deferrals by the seven largest banks are down to fewer than 145,000…

The number of loans on hold is expected to fall further in coming weeks as more reach the end of their six-month deferrals…

The value of deferred loans by the seven largest banks has now fallen below $100 billion – down to $86 billion. This figure peaked at more than $250 billion in June.

Clearly, the risks to the property market and economy have receded significantly over recent months.

While we are still likely to witness some stress at the margins, especially once income support measures are unwound early next year, the ‘mortgage cliff’ is no longer a systemic threat.

Unconventional Economist
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  1. How many panicked initially and deferred their loans, but have started paying again thanks to jobseeker, jobkeeper and early super withdrawals ? Can they all keep paying as these are scaled back and phased out?

    • David – did you notice in Leiths snappy article and punchy conclusion that nowhere did he mention how much of this reduction in “holidays” is due to the banks foreclosing on those mortgages ?

      Its not mentioned in the source – but if people are going to present themselves as informed and offering some basic level of analysis then this is the first question any self respecting person would ask – surely ?

      Basically the reason these people are no longer on mortgage holidays is because the Australian tax payer has picked up the defaulted mortgage from the banks bad loan book – you’re welcome Leith.

      • I heard a rumour that they were not foreclosing in the traditional sense, but using the TFF to buy the property back, keeping the former owner on as a form of tenant. This way the mortgage is no longer deferred…. They will then either sell the property back to the mortgage holder later or just sell it off to clear the asset from the books.

    • Jumping jack flash

      and with regards to early super withdrawals, nobody seems to talk about that massive savings increase that was detected shortly after early access to super was green lit..
      I wonder what that was? Wages certainly didn’t increase. Cost of living didn’t decrease.
      And I wonder where all that went? Is it still there? Was it spent on these mortgage payments? Probably some.

      But check out new mortgages. They’re going gangbusters and I predict they will continue to up to and a bit after April next year. There are no coincidences, especially in a debt economy that was running so close to the wire for 10 years.

      By the way, so far only the big 4 banks have asked me about super and required 6 months’ worth of statements, but the smaller lenders don’t seem to, at least they haven’t asked me for anything yet.

  2. I’m pretty sure there is some creative accounting going on here. Commenced repayments via IO loans at ‘special rates?’

      • The auditors are all part of the ‘system’.
        They are there to facilitate/hide the frauds and the true nature of the ‘system’ itself.

  3. happy valleyMEMBER depositors always fixes things – and if only, they’d fall off their perch their deposits could be expropriated as will inevitably happen anyway.