Loan deferrals drift lower

Commonwealth Bank released an update on COVID-19 temporary loan deferrals.

On the home loan side of things, deferred facilities fell by 21,000 (or $8 billion) in September.

About 93,000 loans remained in deferral, of which 52,000 are due to expire in October, although clearly many of these will be extended out further.

Overall, 6 per cent of home loan facilities remained as home lending deferrals as at September 2020, well down from 8.2 per cent in June 2020.

Projecting this trend forward loosely suggests that as a percentage of deferrals matters should have largely righted themselves by the first quarter of CY 2021.

The same is also true when looking at home loan deferrals by loan balances, with a significant decline from 9.8 per cent to 8 per cent in September.

One potential sticking point could be seen in the state of Victoria, where so many small businesses have been unable to trade or operate as restrictions on movement continue, and indeed this is already in evidence in the high share of deferred SME loans in Victoria.

Source: CBA

Source: CBA

About Pete Wargent Pete is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. Using a long term approach to building businesses, investing in equities, & owning a portfolio he achieved financial independence at the age of 33. Visit his blog