The Australian Banking Association – ABA – has said that more than half of the home loans deferred at the beginning of the pandemic are still not being paid, in spite of the extension date coming to a close.
Australia’s major lenders in March told consumers that they could defer home loan repayments for a period of six-months amid the job losses and economic uncertainty of the COVID-19 pandemic.
Now, though, that deferral period has come to a close, and the ABA has said that more than half of those loans are still not being paid. In June, statistics showed that half a million home loans were officially paused, with 10% of mortgage repayments not being paid by homeowners.
At the beginning of October, this number dropped to 270,000.
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Chief executive of the Australian Banking Association, Anna Bligh has released a statement saying that these numbers were a good indication of an economic recovery, stating that “this is a good sign for the economy.”
“It shows that more Australians are getting back on their feet and resuming their loan repayments,” Bligh said, adding that “these loan deferrals have helped hundreds of thousands of Australian families and small businesses survive the pandemic.”
According to a report from The ABC, “one-in-five people on pause are ‘ghosting’ their lender: not responding to phone calls, texts, emails or internet messages.”
The ABC says that data released by the Commonwealth Bank shows a 48% drop in the number of home loan deferrals, which was reduced from 210,000 in June to 129,000 earlier this week.
The Commonwealth Bank’s chief executive officer, Matt Comyn has said that “further significant reductions are expected as initial temporary repayment deferrals continue to expire through October.”
“While these trends are encouraging, we are conscious that many of our customers still require our ongoing support, particularly in regions most affected by COVID-19, such as Victoria, which is reflected in requests for deferral extensions.”
Comyn said that loans issued for investment properties represented more than one-third of deferred mortgages, and added that loans bearing less than a 10 per cent deposit remained on pause.
Rachel Slade, group executive for personal banking with the National Australia Bank has said in reference to further deferral extensions that “extending a deferral is only really an option when there’s certainty about returning to a sense of income to repay the debt.”
“Otherwise, really, the customers are just deferring an inevitable outcome and in fact the situation they might find themselves in later on is worse than facing it today,” Slade said.