Loan deferrals nearly triple in a month as lockdowns continue

author-avatar By on September 15, 2021
Loan deferrals nearly triple in a month as lockdowns continue

Figures released by the Australian Banking Association revealed that hardship assistance has almost tripled, with loan deferrals continuing to rise.

More than 57,000 customers have received hardship support during the recent lockdowns, according to the Australian Banking Association (ABA), up from around 20,000 last month.

These numbers represent more than 30,000 home and business loan deferrals, as well as deferred credit card payments and waived fees and charges.

Specifically, home loan deferrals are up from 14,500 last month to 27,000 this month. Within the same period, business loans have gone from 600 to 3,500.

Majority of hardship assistance coming from NSW

NSW customers made up more than half (57%) of all recent hardship assistance provided.

Additionally, NSW residents made up for 69% of mortgage deferrals and 72% of business loan deferrals.

Anna Bligh, ABA CEO, said that despite the majority of hardship approvals coming from NSW and Victoria, customers everywhere are reminded not to go it alone.

"As lockdowns continue to be extended across cities and states, it is no surprise more strain is being put on people and businesses but it is important to remember that banks are here to help" Ms Bligh said.

The table below shows the number of COVID-19 hardship and deferred loans across Australia from 8 July 2021 to 5 September 2021.

ABASTATS.jpg

Source: ABA

Significantly below peak assistance last year

Despite the rise in deferrals over the past few months, this is well below the peak of hardship last year, when one in ten residential mortgages had been deferred representing $195 billion.

Home loans still continue to be the most common type of loan deferral, making up more than 88% of all deferrals.

Ms Bligh urged people who are feeling the strain to put their hand up for assistance.

"The sooner you talk to your bank, the sooner they can help you find a solution that is right for you," Ms Bligh said.

"Support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, no matter where they live or their line of work."


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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.


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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): Great Southern Bank, 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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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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