Mortgage stress declines: Households paying back 80% of COVID loan deferrals

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on January 29, 2021
Mortgage stress declines: Households paying back 80% of COVID loan deferrals

New data shows a significant drop in home loan deferrals as Australians resume their mortgage repayments.

Data from the Australian Prudential Regulation Authority (APRA) found that at the end of December, the value of deferred home loans fell by $7 billion to $43 billion.

That's a significant drop from May, when home loan deferrals peaked at $192 billion.

It was a similar story for small business loans, with loan deferrals plunging from a peak of $56 billion to $6 billion in December, and down by $2 billion since November.

Buying a home or looking to refinance? The table below features home loans with some of the lowest 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 29, 2022. View disclaimer.

According to Treasurer Josh Frydenberg, the current value of deferred housing loans is over 80% down from the peak in May.

Similarly, the value of deferred small business loans has plummeted by more than 90% since May.

“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," Mr Frydenberg said.

apra22

Source: APRA

By state, Victoria has the highest number of loans subject to deferral eligible for capital concession, with 2.8% of loans deferred compared with the rest of the country at 1.4%.

According to APRA analysis, more than 10% of home loans were deferred at the peak of the pandemic - that number has now fallen to 2%

It comes as the March deadline for loan deferrals fast approaches, though some of Australia's major banks have said they've stopped accepting new applications for mortgage deferrals.

Household lending strong

Home loan lending continues to surge as borrowers seek to take advantage of ultra low interest rates.

APRA's monthly authorised deposit-taking institution (ADI) statistics released today showed both owner occupied and investment loans increased.

apra

Source: APRA

"This is consistent with the continued broad-based increase in national house prices and market activity, driven by strong demand for detached dwellings," APRA said.

Commonwealth Bank data released today also shows that lending for housing continued to surge over the final months of 2020, with lending for renovations growing at an "extraordinary pace" largely thanks to the government's controversial HomeBuilder scheme.


Photo by Ian Branch 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. 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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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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