Treasurer Josh Frydenberg says the continued decline in loan deferrals shows that the Australian economy is recovering from the COVID-19 pandemic.
New Australian Prudential Regulation Authority (APRA) data shows that the total value of deferred home loans fell by $7 billion in December, to just $43 billion. This compares to a peak of $192 billion in May.
Meanwhile, the value of deferred loans for small and medium enterprises fell by $2 billion month-on-month to just $6 billion, after peaking at $5 billion.
This means that only 2% of all mortgages and SME loans are now on deferred payment plans.
“The value of deferred housing loans has now fallen by almost 80 per cent since their peak in May while the value of deferred small business loans is around 90 per cent lower than at their May peak,” the Treasurer said.
“As more households and businesses resume loan repayments, banks are in an even stronger position to continue lending in support of the economic recovery by helping those wanting to buy a home, invest or grow their business”…
The loan figures correspond with the expiry of the majority of the six-month deferrals offered by the banks and show deferral applications continued to fall during Victoria’s COVID-19 lockdowns.
Deferred mortgages and forced sales clearly no longer present a material threat to the Australian property market nor economy.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
