Nearly half of all loans deferred due to COVID-19 hardship have resumed repayments, according to figures from the Australian Banking Association (ABA).
The total loans deferred by Australian homeowners and businesses peaked in late June, with around 500,000 mortgages and more than 200,000 small business loans having paused repayments.
As of last week, the number of deferred mortgages dropped to 270,000, with repayments having been resumed on at least 224,000 loans, based on data provided by seven of Australia’s largest banks.
While this means almost half (45%) of deferred home loans are back to making regular loan repayments, closer to two in five (41%) small and medium business loans which had been deferred have also resumed payments.
According to ABA CEO Anna Bligh, the figures are a “good sign for the economy”.
In the past month alone, over 130,000 mortgage and 50,000 SME loan customers have resumed their regular payment plan as they came to the end of their six-month deferrals and were up for review.
Now, according to the data from Australia’s seven largest banks, the total number of deferred loans has dropped to 439,000.
The Real Estate Institute of Australia (REIA) has welcomed the news that repayments have resumed on such a large portion of the country’s deferred loans.
REIA President Adrian Kelly said the data is not only a promising sign for the economy as a whole, but bodes particularly well for the property market.
“The resumption of repayments in about half the cases is an encouraging sign that mortgagees will not be facing a cliff that some anticipated a few months ago,” Kelly said.
“The banks’ commitment to working with customers is welcomed; and suggests fire sales will be an absolute last resort as the recovery commences.”
However, Kelly conceded there remains a range of factors which will impact the Australian property market which have yet to play out.