How will the end of mortgage deferrals affect the real estate boom?


CBA rivals have seen similar trends. The National Australia Bank had 1,037 deferred home loans at the end of February after allowing around 110,000 people to withhold repayments last year.

“Considering the large number of clients who have resumed making repayments and receiving additional support, we do not expect the end of postponements to have a significant impact on the housing market,” says Rachel Slade , head of the NAB group for personal banking services.

Westpac has around 2,000 deferred loans – a tiny proportion of its mortgage portfolio, while official figures last week showed ANZ Bank had 0.9 percent of its home loans deferred at the end of the month. from February.

However, the end of mortgage deferrals could still weigh on parts of the real estate market.

CoreLogic’s research director, Tim Lawless, says the risk of deferred lending has “declined significantly, although investor-dominated parts of the market may still feel the impact of the end of deferrals.

Banks have not indicated where most of the remaining deferred loans are located, but Lawless says they are likely concentrated among investors, especially in the apartment developments in downtown Sydney and Melbourne. He thinks banks would start to be less patient with struggling real estate investors.


“Just reading between the lines, it looks like there will likely be less flexibility for investors,” he says. “It’s a net negative for the housing market, but I think the impact will be quite localized.”

Like banks, Lawless believes the housing market as a whole has enough momentum to offset the impact of ending loan deferrals, but he doesn’t think the pace of price growth can continue. much longer.

It is clearly not viable for Australia to continue to record the fastest growth in house prices since the 1980s, while household incomes do not increase. It will simply be too expensive for buyers to continue to bid.

The end of JobKeeper and other government programs, including the HomeBuilder construction grant program, are also likely to dampen searing housing demand in the coming months.


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