CLOSE TO 85% OF LOANS NO LONGER ON HOLD BECAUSE OF COVID-19
There is light at the end of every tunnel, just as there are positive signs for the Australian economy. With March likely to see the end of the loan support packages it is encouraging to see a reduction to the amount of loan deferrals starting already across the country. Although it is not smooth sailing ahead, the data released by the Australian Banking Association is a step in the right direction for our economy.
Below is Gerard Cockburn’s article ‘Australian Banking Association: Close to 85 per cent of loans no longer on hold because of COVID-19’.
Normal repayments have resumed on close to 85 per cent of all loans placed in deep freeze during the coronavirus pandemic, sparking positive signs of a swift economic recovery.
Latest loan deferral figures from the Australian Banking Association (ABA) show 118,000 loans across seven of the country’s largest banks remain on pause at a total value of $41.76bn.
At its peak in June last year, roughly one million mortgages and business loans suspended repayments, equating to approximately $246bn of deferred funds.
Australia’s banking industry at the beginning of the pandemic implemented broad loan deferral packages to customers who had experienced financial hardship as a result of the COVID-19-induced recession.
The latest outstanding number posted by the ABA represents 15 per cent of all the deferred loans at the scheme’s height last year.
ABA chief executive Anna Bligh said the tapering of deferrals was a positive sign the country was swiftly recovering from the pandemic.
“These are encouraging signs for the nation’s recovery,” Ms Bligh said.
“The road ahead is uncertain, but it’s good to see the vast majority of homeowners and small businesses getting through the worst and getting their finances back on track.”
Business loans have made a stronger comeback than residential mortgage lending, with only 6.6 per cent of small business loans still frozen.
Around 18 per cent of home loans suspended remain paused.
“More small businesses are starting to resume their loan repayments, reflecting Australia’s successful efforts in fighting the virus,” Ms Bligh said.
In terms of state breakdown, Victoria has the most mortgages still on repayment deferrals with NSW next.
The southern state also has the highest number of small business loan deferrals on issue.
The sweeping loan support packages are expected to finish by the end of March; however, Ms Bligh said banks would continue to provide ongoing tailored support to people still impacted by the financial ramifications of COVID-19.
“Australian banks will continue to work throughout 2021 to support households and businesses, taking a fair and compassionate approach to get people through the pandemic,” she said.
The ABA is the peak body that represents the country’s banking industry.