Australia’s mortgage time bomb defused

The Australian Prudential Regulatory Authority (APRA) has released data on loan deferrals to November 2020, which reveals that the number and value of deferred mortgages has plunged.

The number of mortgage deferrals had shrunk by around three quarters, from a peak of 488,249 mortgages in May to 118,919 mortgages in November.

In a similar vein, the share of total mortgages deferred plunged from a peak of 11% in May to just 2.8% in November.

Not surprisingly, Victoria had the highest share of mortgages deferred in November:

Below are the actual shares of mortgages deferred by jurisdiction as at November:

  • VIC: 4%
  • NSW: 3%
  • NT: 2%
  • WA: 2%
  • QLD: 2%
  • SA: 1%
  • TAS: 1%
  • ACT: 1%

According to APRA:

Exits from deferral continued to outweigh new entries for the fifth straight month in November, with $32 billion in loans expiring or exiting deferral and $7 billion entering or being extended. Victoria remains the state with the highest proportion of loans subject to deferral amongst the states and territories, with 3.2 per cent of loans deferred compared with the rest of the country at 1.7 per cent.

Overall, deferred mortgages and forced sales no longer present a systemic threat to the Australian property market or economy.

Unconventional Economist
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Comments

    • boomengineeringMEMBER

      Yeah that Seek job, brain [email protected] I escaped from has instigated a bombardment of similar job (nursing home maintenance officer) requests to apply for which I was way over qualified for and one MBer frightened me off that type of work suited for the Nepalese workforce.
      Will unsubscribe Seek after this post.

    • happy valleyMEMBER

      Nah – the RBA happy clappies and their private bankster matters have never enjoyed r.ping retail depositors more than now, apart from the orgasm they will get when the RBA likely implements NIRP this year.

    • Donald Rumsfeld

      The information presented here is people exiting deferrals – HOW they exited is not mentioned of course and is key to understanding the data.

      The rate has gone from 11% to 3% – but was that change brought about by banks buying out those failed loans with newly issued mortgages in the banks names via the TFF or was it from the mortgagees finding new work. The great thing about the banks issuing new mortgages to buyout the failed loans is it shows up as New Credit and a boom in new buyers as presented yesterday on this website.

      I very much doubt its from people finding new work – no chance.

      Absolute propaganda – pure and simple.

  1. Jumping jack flash

    This is great news.
    But it all depends on whether the debt grows fast enough. We should be able to tell by March or April if we’re on track to a glorious new golden age of debt, or whether we will need to sweat out the next 10 years with high immigration and wage theft, slowly melting everything away until the next rounds of stimulus is required.

  2. Goldstandard1MEMBER

    So all good then? That is still A LOT of people hanging on without payments and they still won’t let them fail.
    Can busineses go insolvement yet?
    Are people still employed if on jobseeker?
    Are interest rates still at zero?
    Is the virus cured so the we can open teh gates?
    No, and we are with this virus (thus border closures) for 2 years no matter what the hopium spruikers are saying (Vaccine is double dose and does not stop you getting it and spreading it).

    The bottom line is that the market is nowhere near operating in a natural capitalist environment and when it does, Boom Crash Opera….. watch the banana skin.

    • Not really a vaccine is it. It perhaps has a more sinister purpose. As for the economy being saved – yes, in the short term it looks rosy but the world outside Australia looks dire.

      • Jumping jack flash

        The entire COVID thing was very convenient. I believe it is real. I believe that people are dying. I believe that it is over-reported and the risk is exaggerated.

        It was no secret that the entire global economy was in dire straits at the end of 2019.
        Australia alone was short (by my crude calculations) around 600 billion dollars (of debt or otherwise, but debt is so much easier to make) of missing “growth” since 2008. And it showed. Everything was slowly but surely getting worse and worse.

        COVID arrives, cue massive stimulus all over the developed world. The recovery is here. Things are better than they ever were. Never let a good crisis go to waste, and all of that.

        Time will tell whether the vaccines work. Seems like they have plenty of test subjects eager to give them a whirl.

        If they don’t work, or don’t work well, then it is not huge problem, it will simply be an excuse for more stimulus until they find something that works, or the economy is healed sufficiently that COVID no longer needs to be as big of an issue.

        • It’s sad if one questions the ‘crisis’ then one is dubbed a ‘covidiot’ or must be a 5G or ‘Reset’ goon.

          We need to deal with the hysteria and lack of critical thinking. But people don’t like being told they are unthinking or addicted to tragedy pron.

    • Jumping jack flash

      Its not that it is TBTF, houses are the foundation of the entire debt economy.
      If houses go under, so does everything.

      Its like saying that the car’s engine is too big to fail. The car is basically an engine with wheels attached to it. Without an engine it would be a fancy go-kart.

      The New Economy is basically a ball of mortgage debt that gets passed around between people, growing each time, justifying the house prices, and justified by the house prices, simultaneously.

      • Arthur Schopenhauer

        Car companies are really engine companies and they think of themselves that way. Most of the other other components are outsourced to sub-contractors.

        An accurate analogy. 👍😀

  3. I asked my sister in law yesterday (she’s a broker) if banks were scrutinising loan applications where people had withdrawn Super. She told me the banks may question it, but it won’t get them knocked back from a loan in many instances. In some cases people were using the $20-40k withdrawal (couples) to avoid the requirement for LMI.

    So that’s the latest I’ve heard, as I know some people were doubting that the Super was being used to leverage into housing. Sounds like it won’t knock you back (in many cases) and in 6 months the banks will not question it anyway.

    • Jumping jack flash

      Been saying it for months, and this is my exact experience. Only the big 4 have asked me the question, in passing.
      40K of super (plus homebuilder which also counts towards the ponzi buy-in.. er, deposit) will get you a nice pile of debt at 95% LVR.

      In my opinion this is what is powering the recent activity, and it should continue at least to March, and possibly a little bit after.

      By March we would all know whether we are on track to a new 2006esque golden age of debt, where high inflation was an issue, rather than low inflation. Fortunately inflation was decoupled from interest rates when Fearless Phil took the reins, so we won’t get a repeat of 2008 with any luck.

  4. The housing market was going to crash with the pandemic, job losses and no immigration.
    We can also extrapolate linearly and say work from home is here to stay and regional living push will continue as it has the last 12 months.

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