• Australian mortgage deferrals have fallen to just a quarter of their peak, according to the latest APRA figures.
• Frozen mortgages are down to below $50 billion, while frozen business loans are down to $7.6 billion, from a peak of $195 billion, and $55 billion respectively.
• The improvement is likely a product of expiring deferrals, continued government support, and an improved economic situation.
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One of the largest risks to the property market, and to the broader Australian economy, looks like being handled as borrowers manage to keep their head above water.

The latest data from regulator APRA shows that Australians weren’t making repayments on $49.5 billion worth of home loans in November, significantly down from a peak of $195 billion in June.

A sharp end of year reduction means that less than 3% of all Australian mortgagers currently aren’t able to meet their monthly repayments, down from 11% just a few months ago.

Likewise, business owners are currently deferring just $7.6 billion in debt, having unfrozen almost $50 billion in debt since June.

It brings the total amount of frozen debt on banks’ ledgers to $60.3 billion, down from an eye-watering $274 billion.

While still far from ideal, the mammoth improvement in loan serviceability is encouraging, especially considering the sky-high rate of household debt in Australia, much of which is tied up in a hot property market.

In part, it reflects the success of banks in transitioning customers out of the arrangements, with most initial deferrals expiring after six months.

None did better on that count than NAB, which pushed 60% of deferred customers to recommence repayments in November.

Others have struggled more. The Bank of Queensland is still grappling with around 15% of its loan book deferred. Bendigo, Westpac, and ANZ meanwhile are hovering closer to the 10% mark, or roughly three times the sector average.

Improved deferral figures also reflects a much-improved economic outlook, as Australia fared better than most in containing the coronavirus, and thus minimising to a point the economic fallout.

Unemployment which was tipped by Treasury and other forecasters initially to surpass 10%, ended the year much closer to 7%.

However, while the overall figures are encouraging, Australia’s economic recovery from this point is not assured.

On the one hand, vaccines, due to begin their rollout in March, will help contain the virus further and potentially reduce the proclivity of further lockdown measures.

On the other, much of the support that has helped guide Australian households and businesses through the pandemic is due to be phased out in the coming months, slashing the rate of financial assistance provided by JobKeeper and JobSeeker, for example.

If managed well, a smooth transition will see some of the financial risks posed by the pandemic curtailed.

If not, business and property owners may not be out of the woods just yet.

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