Nearly 24,000 deferred home loans reported in NSW, VIC amid lockdowns

Borrowers affected by the recent closings have reached out to their lenders for support, with New South Wales and Victoria reporting that nearly 24,000 borrowers defaulted on their mortgage payments.

According to the latest data from the Australian Banking Association (ABA), outstanding deferrals in Australia have risen to more than 27,000 as of September 5.

Combined with commercial loans, the number of outstanding deferrals has exceeded 30,000.

During the height of the pandemic last year, the Australian Prudential Regulation Authority (APRA) reported that around one in 10 home loans deferred.

While Victoria saw a large increase in deferrals over recent closings, it was NSW that drove the increase in home loan deferrals.

In fact, around seven out of 10 outstanding mortgage deferrals in Australia are from New South Wales.

A similar trend can be seen for business loan deferrals.

NSW also took the lion’s share of hardship approvals, including deferring credit card payments and waiving fees and charges.

Anna Bligh, CEO of ABA, said that the COVID restrictions and lockdowns have put many Australian borrowers and businesses in a challenging financial position, but despite the deferrals being concentrated in lockdown-affected states, it is important that the borrowers don’t try to resist.

“As lockdowns continue to spread in cities and states, it is not surprising that more pressure is being put on individuals and businesses, but it is important to remember that banks are here to help,” Ms Bligh said.

What to do when deferral periods end

Borrowers who are not yet able to resume their payments have Several options to consider when the payback vacation is about to end.

According to ABA, banks are willing to work with borrowers to find a personalized solution.

In addition to extending the payment vacation period, banks may offer to extend the duration of the loan to minimize monthly payments and give borrowers more time to finish paying their loans.

Borrowers can also request that their payments be converted to interest only for a specified period. Banks are willing to accommodate requests like this to alleviate the plight of their customers.

Another option is to consolidate all the debts into a single major repayment. This will allow borrowers to save on interest rates and simplify their repayment programs, especially if they have multiple loans.

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