Mortgage holders defer $153.5b in housing debt during pandemic

Repayments on one-in-14 mortgages have been deferred by Australian households during the COVID-19 pandemic, new figures reveal, totalling $153.5 billion in housing debt.

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Chances are someone on your block or building has had to ask the bank to freeze their mortgage repayments, with new data revealing one in 14 loans are on ice.

Figures provided to The Daily Telegraph show 429,000 mortgages have been paused since late March, including about 37,000 this week, down from 50,000 the week before.

The total value of the deferred housing debt is $153.5 billion, which now exceeds lenders’ initial expectations.

A further 274,000 mainly business loans worth an extra $58 billion have also been halted.

Interest on all these borrowings will still accrue during the six-month hiatus.

Australian Banking Association CEO Anna Bligh said “families who are financially affected by this crisis have had the breathing space they need”.

The fresh data emerged as Prime Minister Scott Morrison warned that financial assistance from banks and the federal government was “finite”, as he again made the case for reopening the economy as quickly as was safe.

Australian Prime Minister Scott Morrison has warned financial assistance from banks is ‘finite’. Picture: Getty

“Our banks, and indeed the federal government, has stepped up significantly in the packages of support that have been provided, the deferral and, indeed, the waiving in some cases of commitments, and also holding back on issues such as recovery operations and things of that nature, that is very welcome,” Mr Morrison said.

“But, you know, our system is finite, essentially, when it comes to these things, and that’s why it is so important that we restart our economy.

“So, we have to be very mindful, as we go through this crisis, that the clock is ticking when it comes to how far and how much can be done,” the PM said.

“And that’s why it’s so urgent that we move safely to reopen our economy and get people back in jobs and being supported by businesses that are in a stronger economy, and there isn’t the same reliance on things like income support or, indeed, banks having to operate in those sort of unusual arrangements.”

Australian Prudential Regulation Authority (APRA) chair Wayne Byres.

Mr Morrison said Australian Prudential Regulation Authority boss Wayne Byres had told Friday’s National Cabinet meeting that the superannuation system was “responding very well” to early redemptions, with no liquidity issues.

Funds have released $11.7 billion to members. That will rise, given the second round of redemptions doesn’t open until July. The super sector had predicted up to $50 billion would be withdrawn.

Mr Morrison said: “The industry estimates of what the claims would be have not been realised.”

The PM also said insolvencies were running at below average levels after the government put in place protections against creditor-driven liquidation during the coronavirus crisis.

Mr Morrison tried to provide some hope for the hard-hit travel sector, saying the government was working with Tourism Australia – which he once ran – to encourage Australians who would have gone abroad for a holiday to instead spend that money domestically.

Australians who go abroad spend $20 billion a year more than international visitors do here, he said.

“That's up for grabs for Australian domestic tourism operators. Australians who might otherwise go elsewhere, that is a very large market, and that will be targeted,” the PM said.