NAB mortgage deferrals plummet too

Source: Wikimedia Commons

NAB full-year results show its number of mortgages in deferral have fallen by almost 70%.

NAB offered deferrals to a peak of 110,000 home loan customers over the coronavirus period. 

As of June 2020 this number had fallen to 92,000, and as of 23 October, 75,000 loans are no longer in deferral, bringing the number of NAB's deferred mortgages to 34,000, worth $14 billion. 

This is worth less than 5% of NAB's total loan book at the moment, and according to NAB, a further $10 billion worth of loan deferrals are expiring come the end of November. 

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.

 

NAB is the last of the big four banks to release its full-year results, along with its data on mortgage deferrals, which are a critical point of reference for how Australian households will cope financially post-COVID, especially after government support is wound back. 

The Australian Banking Association (ABA) released data in mid-October saying repayments had resumed on nearly half of all deferred mortgages. 

Commonwealth Bank said it should still have around 41,000 out of a maximum 210,000 loans still being deferred (19.5%) come the end of October, while ANZ also revealed around half of its home loan deferrals have come to an end (43,500 out of 95,000). 

Just this week, Westpac's full-year results showed 31% of its deferred customers had to request a further four-month extension. 

Each of these figures from the biggest banks are above the benchmark set by the Reserve Bank, which recently predicted that just 15% of deferred mortgage customers would struggle to resume repayments.

See also: Have a mortgage deferral? Here's how your lender is expected to help when it ends

Most of NAB's remaining deferrals in Victoria 

NAB's deferral data fits the trend seen by other banks where Victorian customers - those hit hardest by the virus and subsequent lockdowns - occupy the highest number of deferral spots. 

According to NAB, Victoria represents 41% of referrals to NAB Assist, 37% of deferral extensions granted and 33% of remaining deferral balances.

Westpac, by comparison, also had Victoria at the highest deferral extension rate at 38%, ahead of the national average of 31%.

Promisingly, 38% of NAB's customers in deferral elected to resume their repayments prior to their deferral expiry, as recommended by the ABA, while 54% advised their intent to resume repayments at the end of the deferral period. 

Only 2% of NAB's customers asked for a deferral extension, while 1% had to convert to interest-only loans,

Deferrals overweight higher LVRs

NAB also followed a market trend where customers with a higher LVR - loan-to-value ratio - were over-represented. 

NAB had 7% of its deferred loans among customers with an LVR of 90% or higher, which is higher than the market average of 5%. 

According to Australian Prudential Regulation Authority (APRA) data, the level of 90% LVR loans continues to be disproportionate with the wider market in terms of deferrals. 

Commonwealth Bank (CBA) had the highest share of 90%+ LVR loans deferred out of the 20 largest banks at nearly 13.5% as at October 1, up from 12.9% in July.

Those with an LVR of 60 or less accounted for 34% of NAB's deferrals, but this segment makes up 43% of the home loan market. 

Source: NAB

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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.

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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