More Australian borrowers have started to get back to paying their monthly repayments, as the number of deferred loans has declined significantly from its peak this year.
Data released by the Australian Banking Association (ABA) shows that the number of deferred loans has fallen below 300,000 this month, reflecting a nearly 70% drop from the height of the action several months ago.
At the peak of the pandemic, over 900,000 loans were deferred by Australian banks. Of that total, 803,000 loans were deferred by the seven largest banks, amounting to a total value of $250bn in June; now, that figure has fallen to $86bn.
ABA CEO Anna Bligh said the increase in the number of Australians who are back on track with paying their repayments shows that the economic recovery is gaining momentum.
"Australian banks have played a major role in carrying the economic burden of the pandemic for their customers. The good news is that the majority are now bouncing back as they restart their loan repayments," she said.
Adrian Kelly, president of the Real Estate Institute of Australia (REIA) echoed the same sentiments, adding that the decline will also boost the sentiment in the property markets.
"This is good news for those living in investment properties as it provides increased security to tenants," Kelly said.
"It also means catastrophic forecasts for Australia’s housing market made at the start of the COVID-19 outbreak are simply not coming to fruition so customers should have increasing confidence to buy and sell."
The number of loans on hold is expected to fall further in the coming weeks as more borrowers reach the end of their six-month deferrals.
“It’s great to see a lower than expected number of people needing to extend their deferral period," said Bligh.
The table below shows the changes in the number of deferrals by the seven largest banks from the peak in June.