Mortgage deferrals drop to record low, March fiscal cliff averted?

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on January 05, 2021
Mortgage deferrals drop to record low, March fiscal cliff averted?

New data has revealed loan deferrals have tumbled to new lows.

The Australian Prudential Regulation Authority (APRA) found at the end of November, just over $60 billion worth of loans were on temporary repayment deferrals, 2.3% of all loans. 

Of those deferred, $49.5 billion were housing loans, making up 2.8% of all housing loans, and $7.6 billion were small and medium-sized enterprise (SME) loans, 2.4% of all SME loans.

This is the first time housing loan deferrals have outpaced SME loan deferrals, but the number of housing loans deferred still outnumber SME loans deferred at nearly four-to-one.

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.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 22, 2022. View disclaimer.

The figures are a far cry from the peak seen in late June, where 11% of home loans totalling $195 billion were in deferral.

"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," APRA said. 

defdec201

Source: APRA

However, Victoria continues to struggle compared to other states and territories, with almost double the proportion of deferred loans compared to the rest of the country. 

"Victoria remains the state with the highest proportion of loans subject to deferral amongst the states and territories, with 3.2% of loans deferred compared with the rest of the country at 1.7%," APRA said. 

November marked the first time housing loans had a higher incidence of repayment deferral compared to SME loans. 

Westpac, ANZ, and Bank of Queensland (BOQ) had the largest share of deferred loans at 3%, and BOQ also had the highest percentage of new or extended deferrals at 16%. 

Conversely, NAB recorded a 60% increase in expired or exited deferrals. 

defdec202

Source: APRA

Lenders announced they would extend mortgage deferrals to borrowers still experiencing financial hardship to March, on a case-by-case basis. 

With JobKeeper set to end in March, and JobSeeker to return to its pre-pandemic $40 a day in March also, economists and politicians feared the end of the month would bring about a fiscal cliff. 

The latest deferral data coincides with better than expected employment figures in recent months.

More to come..


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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