Mortgage deferrals vanish into thin air

New data from the Australian Prudential Regulation Authority (APRA) shows there were only $14 billion worth of loans that were still on a deferred repayment plan at the end of February 2021. This comprises $11.7 billion worth of mortgage loans and $1.5 billion of loans to small and medium enterprises (SMEs):

Deferred loans - APRA

The number and value of deferred loans has shrunk immensely since the peak of the pandemic.

The contrast with the peak of the pandemic cannot be more stark. The table below shows the value and share of deferred mortgages at its peak in May 2020:

At the peak of the pandemic, 11% of mortgages were on a deferred payment plan.

In particular:

  • The value of deferred loans has shrunk by 95% since the peak of the COVID-19 pandemic, when there were loans totalling $266 billion on ‘repayment holidays’.
  • The value of mortgage deferrals are down 94% from peak when there were $192 billion loans on repayment holidays.
  • The share of total loans on deferral has shrunk from 10% in May 2020 to only 0.5% in February 2021.
  • The share of total mortgages on deferral has shrunk from 11% in May 2020 to 0.7% in February 2021.
  • The total number of mortgages on deferral has fallen from a peak of 488,249 mortgages in May 2020 to only 28,320 mortgages in February 2021.

In short, the ‘mortgage cliff’ that was towering over the housing market last year has vanished into thin air.

Unconventional Economist
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  1. boomengineeringMEMBER

    When on the surface you may think that shutting down the economy for a year should have devastating consequences, one has to keep in mind the amount of holidays and time off already built into the system which has minimal effect, if you will, everyone just had their time off all together.
    That said , still think a downturn imminent.

    • Display
      There is a lot being hidden all over
      Don’t worry when the tide goes out, you’ll see what people are wearing

    • Last year Philip Soos spoke about how the stats are being duked. Loans are not weighted by loan amount which means the banks can do something like this:

      Let’s say you have applied for a single LVR 90 . On the bank’s books they can split the loan up into 5 loans. 4 small loans LVR 80, and one large loan LVR90 .

    • Was going to say the same thing. The banks were falling over themselves to move deferral borrowers to IO to get them off the bad book for the moment. IO is 2% is pretty light on.

  2. Didnt someone say that in Switzerland ( or somewhere ), you bought and paid off a house but if you didnt own it by the time you hit 35, the Government came in and paid off your loan for you?

    The true fact is that I really couldnt care less. Many Australians might be millionaires, receiving tonnes of money and paying of 6 houses which they all own. I might be lonely, single, poor and miserable for the rest of my life. I still dont care. Im still not going to be part of any of this.

    When I die, they can bury me in a cemetary made of Gold but I wont be joining into this party.

    I’ll wait as long as I have to wait. Boomers will die eventually.

    Its not even an option in my eyes. It just doesnt exist 🙂 If I die then I die. Oh well… but I will not support this.

    If Australia is a Country of Slavery, then its just saved me a lot of misery in the long term anyway.

    17 years. It isnt that far away. I can wait.

    • fitzroyMEMBER

      Just wait until the US 10 yr bond interest rate rises leads to the rising of Australian mortgage interest rates. It is already happening – See the recent CBA rise in the older fixed term loan. Not long to wait now.

  3. fitzroyMEMBER

    What does “mortgage deferral” mean in this context? That the banks treat the loan as not deferred? The real question is “what was owed before the deferral, and what was owed now, and what does the bank require to be repaid immediately?