Nearly a million loans deferred as Aussies use super
ONE in 12 home loans were deferred at the height of the pandemic and many households experienced income boosts during the crisis, a new report has revealed.
In June, about 8 per cent of mortgages were put on hold before slightly falling to 7 per cent in August, the Reserve Bank of Australia's biannual Financial Stability Review outlined on Friday.
Of all loans deferred most were in Victoria which has had the longest lockdown.
The comprehensive review examines in detail the nation's finances and despite the pandemic it showed many households are coping financially.
During the pandemic about 900,000 loans - both mortgages and business loans - have been deferred.
The report said deferrals helped mortgage and small business customers "avoid defaults" and said banks needed to "deal carefully" with customers who have taken a break on their repayments.
"Banks need to deal carefully with the loans of borrowers who will not be able to resume
repayments, in a way that balances avoiding further losses to the bank, the interests of the
borrower and potential spill over effects from and sales of collateral," the report said.
It also showed of customers who did defer about 75 per cent were less than three months ahead of their repayments.
Initially most customers who sought deferrals were given six months of breathing space, but for those who still needed help they could get their deferral period extended by another four months.
The report also confirmed the share of households behind on their loan repayments has climbed and is expected to increase further.
But it also showed many Australians have received income boosts during COVID-19 and have more money than pre-pandemic.
"Overall household income in Australia increased in the first half of the year, with large fiscal stimulus payments more than offsetting the decline in employment income.
"Households' cash flow also benefited from loan repayment deferrals and the early release of funds from superannuation.
"Households have increased their savings buffers in response to increased economic uncertainty, including through payments into mortgage offset and redraw accounts."
In August Australia's unemployment fell from 7.5 per cent to 6.8 per cent but the figures do not include people who are receiving JobKeeper payments.
More than 3.5 million Australians are on JobKeeper payments and about 1.8 million Australians are on Jobseeker payments.
The report shows many Australians have "increased their financial resilience through higher mortgage prepayments, paying down personal credit balances, and increasing their savings. "Overall, businesses entered 2020 in good financial shape, but have since experienced sharp falls in revenue," the report said.
Originally published as Nearly a million loans deferred as Aussies use super to survive