Only 3.5% of deferred loans still deferred: ABA
New figures revealed that nearly 97 percent of all deferred loans had resumed their repayments by the end of February.
Data from the Australian Banking Association (ABA) showed that the total value of deferred loans rose from a high of $ 245 billion in July 2020 to just over $ 10 billion in February 2021.
ABA’s analysis of Australian Prudential Regulation Authority (APRA) data on the latest loan deferral figures from major banks showed that as of February 28, total outstanding deferrals were 3.5% of all deferred loans.
At the same time, a considerably higher percentage of home loans remains deferred compared to loans to SMEs, with figures showing that 1.2% of loans to small and medium-sized enterprises (SMEs) (2,803 out of 234,270 loans to SMEs) and 5% of loans to SMEs. home loans (22,480 out of 448,864 loans) remain postponed, the ABA said.
On the books of the Big Four banks, 0.2 percent of SME loans, 0.5 percent of home loans and 0.2 percent of all loan facilities remain deferred, he added.
The ABA said the data came nearly a year after the start of the support measure that allowed borrowers to defer mortgage payments during the COVID-19 crisis.
Commenting on the numbers, Anna Bligh, CEO of ABA, said the top priorities for banks in 2021 would be to support customers who are still struggling financially, to help economic recovery and to “ensure that credit flows through the market. economy in recovery ”.
“Over the past year, banks have cushioned the blow for their customers. Until 2021, their priority is to help customers rebuild and progress, ”she said.
The rise and fall of mortgage delinquencies
Moody’s Investor Service research has found that Australian mortgage delinquencies will increase in the first half of 2021 but will improve towards the end of the year as “the economic recovery gains momentum”.
In their analysis of Australian Residential Mortgage Backed Securities (RMBS), which is based on data from RMBS – Australia: performance update, the rating agency said Australian RMBS default rates would rise in the first half of 2021 due to an “uneven economic recovery”, as well as the end of government and lender support measures.
According to Moody’s, as of December 2020, late rates of 30 days or more for Australian preferential, non-conforming and quasi-preferential RMBS have declined.
Moody’s attributed the decline to the availability of government support measures related to COVID-19 for individuals and SMEs, as well as loan deferral programs supporting borrowers in the second half of 2020.
Delinquency for prime RMBS fell to 1.24% in December 2020, from 1.43% in June 2020 and 1.52 in December 2019, while non-conforming and quasi-prime RMBS delinquencies decreased by 3.95 % in June 2020 to 3.49% in December 2020. However, late payment rates for December 2020 have increased compared to December 2019, where the rates were 3.34%.
According to Moody’s, in December 2020, the share of mortgages in COVID-19 deferred payments averaged around 3% for prime RMBS portfolios, and 4.5% for non-compliant and quasi-prime RMBS .
Commenting on their analysis, Moody’s said: “The Australian economy and housing market are recovering from the coronavirus-induced downturn, and we forecast 3.8% GDP growth in 2021.
“However, the economic recovery is still uneven, with conditions improving in some sectors and remaining difficult in others. In addition, most periods of deferral of loan payments to lenders and some government support measures, including the JobKeeper program and the coronavirus supplement for income assistance recipients, end in March.
“In this environment, mortgage delinquencies will increase in the first half of 2021, especially as borrowers have to resume repayments after the end of deferral periods.”
Moody’s noted that rising house prices limit the risk of mortgage default to some extent, as they would make it easier for borrowers facing financial difficulties to sell their properties and repay their loans.
He concluded: “Towards the end of 2021, as the economic recovery gains momentum, we expect the situation to recover and crime rates to improve.”
Standard & Poor’s recently released RMBS Performance Watch: Australia report showed that the level of mortgage arrears had started to rise. get up, the arrears index rising to 1.37% in December 2020, against 1.28% in the same period a year earlier.
According to APRA data, the value of new loans financed by banks in the last three months of 2020 was up to 20 percent compared to the previous comparative year and totaled $ 127.3 billion.
Of that amount, $ 88.8 billion was in owner-occupied loans, up more than $ 17 billion from the same period in 2019.
[Related: Sydney property prices reach new record high]
Malavika Santhebennur is the Mortgage Securities Reporting Editor at Momentum Media.
Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.