BOQ reports an 80% fall in mortgage deferrals

author-avatar By on December 08, 2020
BOQ reports an 80% fall in mortgage deferrals

One of Australia's largest banks, Bank of Queensland, has reported that just 3% of its total loan book is now in deferral.

Ahead of its Annual General Meeting today, Bank of Queensland (BOQ) reported that as of 30 November 2020, it had just 2,500 housing loans remaining in deferral with balances of $889m. 

Managing Director and CEO George Frazis said it was "pleasing" to see the majority of customers begin resuming repayments, as requested by the nation's banks if it was possible to do so. 

"We will continue to work with the remaining 3% of customers still accessing our banking relief packages to support them in their recovery,” Mr Frazis said.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

That represents a total fall of 80% from the $4.5 billion recorded in June 2020, and is also under par compared to the industry average. 

Data released last month from the prudential regulator APRA also revealed that all banks in Australia combined had $68.2 billion worth of housing loans in deferral, which is 3.9% of all mortgages. 

This is a far cry from previous highs at the height of the pandemic: In late June, that same APRA data showed 11% of home loans were in deferral, to the value of $195 billion. 

APRAnov

Source: APRA deferral data, October 2020

"Exits from deferral continued to outweigh new entries for the fourth straight month in October, with $100 billion in loans expiring or exiting deferral and $12 billion entering or being extended," APRA commented. 

"The total value of loans subject to deferral more than halved over the month to October, with the pace of exits increasing significantly."

Borrowers with 90%-or-greater LVRs continue to be over-represented, however, making up 10% of deferrals despite being just 6% of the total loan book. 

Borrowers on JobKeeper or JobSeeker also continue to be at-risk. 

Data released via SQM Research's Housing Boom and Bust Report 2021 found these ongoing support measures are critical for the ongoing housing recovery. 

BOQnov

BOQ's deferral numbers have plummeted since June. Source: BOQ. 

New mortgage lending sees strong September quarter 

APRA's latest quarterly ADI statistics for the September 2020 quarter revealed strong growth in mortgage lending compared to 2019. 

The data shows that from the September 2019 quarter to the same quarter this year, new loans for owner-occupiers increased by 22.2%, while:

Over the 12 months though, only owner-occupied lending saw growth, rising by 6.4% to more than $1.15 trillion in total.

Otherwise:

  • Investment lending fell by 1.3% to $608 billion;
  • Interest-only loans fell by 22% to $275 billion; 
  • LVR >95 loans fell by 10% to $19 billion

Photo by Jakob Owens on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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