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Loan deferrals plummet by over $20bn

The value of total deferred loans has dropped by $23 billion month-on-month to February as the deferrals program comes to an end.

In its final publication of data on temporary loan repayment deferrals, the Australian Prudential Regulation Authority (APRA) said that as of 28 February, only $14 billion worth of loans remain deferred, comprising 0.5 per cent of total loans.

This is a drop from January when 1.4 per cent – or $37 billion – of total loans were temporarily deferred amid the coronavirus pandemic, and a peak of 10 per cent in May 2020.

Housing loans still comprised the majority of total loans on repayment deferrals, at 0.7 per cent ($11.7 billion), compared with 0.5 per cent ($1.5 billion) of small-to-medium enterprise (SME) loans.

According to APRA, as expected, exits from deferrals have continued to “significantly outweigh” entries into deferrals, with $22 billion in loans expiring or exiting deferrals.

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Furthermore, only $400 million worth of loans entered into deferrals or were extended, compared with less than $1 billion in January.

Victoria remained the state with the highest proportion of loans subject to deferrals at 0.7 per cent compared with the rest of Australia at 0.4 per cent, although APRA noted that this difference tightened in February.

As at 28 February, 0.9 per cent of housing loans remained in deferral in Victoria, compared with 0.6 per cent in NSW, 0.4 per cent in the Northern Territory, Western Australia, Queensland and South Australia, and 0.3 per cent in Tasmania and the ACT.

Meanwhile, 0.7 per cent of SME loans remained in deferral in Victoria, compared with 0.5 per cent in Tasmania, 0.2 per cent in the ACT, and 0.3 per cent in all other states and territories.

Across the major banks, the largest share of total loans subject to deferrals were at Westpac and ANZ at 0.9 per cent, while the lowest share was at the Commonwealth Bank of Australia (CBA) at 0.3 per cent.

The largest movement in new or extended deferrals was at ANZ at 1.1 per cent in February, while the largest movement in expired or exited deferrals was at CBA at 76.8 per cent, according to the APRA figures.

The data also revealed that the largest share of SME loans in deferrals as a share of total SME loans was at ANZ at 0.9 per cent, while the lowest was at CBA at 0.3 per cent. The largest share for housing was ANZ at 1.2 per cent, while the lowest was also at CBA at 0.4 per cent.

Recent figures from the Australian Banking Association showed that the total value of loans deferred had dropped from $254 billion in July 2020 to just over $10 billion in February 2021, comprising 3.5 per cent of total loans deferred.

[Related: Auction markets brace for Easter break after near-record week]

Loan deferrals plummet by over $20bn
Loan deferrals plummet by over $20bn
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