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Summary
- As per the ABA data, home loan deferrals have fallen substantially from 468,786 to 3,170 with the big four banks and Suncorp.
- Business loan deferrals have also fallen steeply with 508 on hold by 31 March 2021.
- Customers still struggling would continue to be supported by banks.
- However, the Australian Treasury expects unemployment levels to rise next month.
Australian home loan deferrals have fallen from 468,786 to 3,170 with the big four banks and Suncorp Group (ASX:SUN), according to the latest data from The Australian Banking Association (ABA).
According to figures, just 0.7 per cent of home loans originally deferred throughout the COVID-19 pandemic, are still temporarily frozen.
Moreover, business loan deferrals have fallen even more steeply, with 508 on hold by 31 March 2021. This is compared to the peak levels of 235,440 resulting in only 0.2 per cent of loans being deferred.
Home loan deferrals have fallen significantly. (Source: © Creativeapril| Megapixl.com)
Rebound in Economy
These numbers are indicative of Australia’s solid rebound following its first recession in 30 years, brought about by the Covid-19 crisis, according to the ABA’s chief executive, Anna Bligh.
Bligh said that the lower-than-expected unemployment levels as well as the rebounding economy is great news for the vast majority of homeowners and small business owners.
Ms Bligh said that customers still struggling would continue to be supported with banks taking a fair and compassionate approach to help people with their financial obligations through the once-in-a-hundred-year pandemic.
Last year, banks agreed to defer loan and mortgages payments for up to six months for those who were financially struggling amid the pandemic, with banks granting a further four-month extension beyond September 2020.
The pandemic led to a significant surge in loan deferrals (Source: © Rik57 | Megapixl.com)
According to the ABA, Victoria has the highest number of small business loans and mortgages that are still on deferral. This is likely due to lockdown laws impacting the state most severely during the height of the pandemic in 2020.
At the height of the pandemic, Victoria was recording over 500 cases per day throughout August. Today, no new cases have been recorded in Victoria.
Unemployment Set to Rise
Although deferral numbers may indicate an upswing in the Australian economy, The Australian Treasury are warning that jobless numbers may rise by as much as 150,000 due to the wind down of the JobKeeper program.
RELATED: Unemployment Numbers Could Increase by ~150K after the end of JobKeeper
Unemployment levels currently sit at 5.6 per cent but are expected to rise to above 7 per cent when new figures are published in May 2020.
This comes as standard payments fell to AU$620.80 per fortnight (from AU$715.70) for individuals and to AU$565.40 (from AU$660.80) for partnered citizens.
Coupled with increased requirements regarding mutual obligations this make the JobKeeper program unattractive and is likely increase the number of people counted as unemployed.
It remains to be seen whether this will impact the current loan and mortgage referral numbers.
