Deferral exits, expiries hit $100bn

The Australian Prudential Regulation Authority (APRA) has released October figures on temporary loan repayment deferrals due to the coronavirus pandemic, which revealed that a total of $87.6 billion worth of loans are on temporary repayment, which is around 3.3 per cent of total loans outstanding.

This is down from 6.7 per cent of total loans outstanding – or $179 billion worth of loans – in September, and 8.5 per cent of total loans outstanding in August, totalling around $229 billion.

A total of $100 billion in loans expired or exited deferrals in October, while $12 billion worth of loans entered deferrals or were extended.

In comparison, $66 billion worth of loans expired or exited from deferral in September 2020, while $17 billion worth of loans were approved for deferral.

The total value of loans subject to deferral more than halved over the month to October, with the pace of exits ramping up significantly.

Housing loans comprise the majority of total loans granted repayment deferrals, with deferred loans totalling $68.2 billion, or 3.9 per cent of total housing loans, which is worth $1.8 trillion.

However, small-to-medium enterprises have a higher incidence of repayment deferral, with 4.5 per cent of SME loans (worth $322.8 billion) subject to repayment deferrals, totalling $14.3 billion.

Borrowers have continued to make repayments, with the APRA figures showing that as at 31 October, 10 per cent were making partial repayments while 11 per cent were making full repayments.

As a share of housing loans, Victoria comprised 5 per cent of all home loan deferrals as at 31 October, down from 12 per cent in September.

NSW made up 4 per cent of all home loans, while the Northern Territory made up 3 per cent, Western Australia made up 3 per cent, Queensland made up 3 per cent, South Australia made up 2 per cent, Tasmania made up 2 per cent and the Australian Capital Territory made up 2 per cent.

As a share of SME loans, Victoria made up 6 per cent, while the Northern Territory and Tasmania made up 5 per cent, Western Australia, Queensland, and NSW made up 4 per cent, and the ACT and SA made up 3 per cent.

AMP held the largest share of total loans subject to deferral as a share of total loans at 8 per cent, while AMP (along with Bendigo and Adelaide Bank) also recorded the largest movement in new or extended deferrals and expired or exited deferrals as a share of prior month deferrals, at 12 per cent.

AMP also recorded the largest share of SME deferrals as a share of total SME loans at 15 per cent.

APRA figures have followed the recent release of data from the Australian Banking Association (ABA), which showed that the number of deferred loans has dropped from a peak of 900,000 to below 300,000, while the value has dropped to below $100 billion.

At the peak of the pandemic, the majority of all deferred loans were across the seven largest banks.

[Related: Deferral expiry to push up non-performing loans: Moody’s]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.