Unpaid home loans plunge

ALMOST 400,000 households struggling to make their mortgage repayments at the height of the pandemic are now paying down their home loans again.

The value of deferred home loans fell to $43bn by the end of last year, after peaking at a whopping $192bn in May as banks provided temporary relief to customers unable to make ends meet because of COVID-19 restrictions.

In a sign of improving economic conditions, new data from the Australian Prudential Regulation Authority showed as of December there were 102,743 households, which continued to defer their repayments, down 488,316 seven months earlier.

It means repayments are not being made on about 2 per cent of the value of total housing loans issued, compared to a peak level of 10 per cent.

The APRA data also shows after the value of deferred business loans peaked at $56bn in May – 17 per cent of total loans on issue – that figure also fell to $6bn by December.

Almost 230,000 businesses deferred loans at the height of the pandemic but just 20,000 are continuing to do so.

Josh Frydenberg said the “substantial and continuing reduction in deferred loans” was

“another positive sign” for the nation’s economic recovery.

“As more households and businesses resume loan repayments, banks are in an even stronger position to continue lending in support of the economic recovery by helping those wanting to buy a home, invest or grow their business,” the Treasurer said.

The unemployment rate has fallen to 6.6 per cent from a peak of 7.5 per cent, as almost 800,000 jobs were created in the past seven months, and 90 per cent of those who lost their job or were stood down are now back at work.

“With 50,000 jobs created in December, business confidence at its highest level since 2018 and the value of home loan approvals reaching an alltime high, Australia’s economy is continuing to recover strongly from the greatest economic shock this country has experienced since the Great Depression,” Mr Frydenberg said.

But Labor has repeatedly warned many Australians who have found work again are in insecure jobs or struggling to secure enough hours.

“The challenge is for us to build back stronger, for us to ensure that people aren’t left behind and that people aren’t held back. Secure jobs are the key,” Opposition Leader Anthony Albanese said.