Nearly 70 per cent of Australians who paused their home loan due to pandemic pressures have resumed repayments as banks encourage customers to assess their options.

But the Australian Banking Association has warned a “time of reckoning” lies ahead, with many remaining deferrers only hanging on because of elevated levels of government support.

The latest figures from the ABA, which assesses the home loan books of the four major banks and those of Suncorp, Adelaide and Bendigo Banks, show that overall home loan deferrals are now down to 145,250.

Compared to June’s peak of 436,139, that’s a 67 per cent fall.

ABA CEO Anna Bligh told Nine newspapers that although the figures were promising, a “time of reckoning” was still head for the tens of thousands of deferrers who opted to continue their home loan holiday.

Ms Bligh told the ABC’s Peter Ryan the banking sector would not be approaching the new year with “rose-coloured glasses”.

Source: Australian Banking Association

“For some of their customers 2021 is going to mean facing some pretty tough decisions,” Ms Bligh said.

“If you are facing long-term unemployment because of what’s happened in your industry and circumstances involving you and your family, there are going to be circumstances where it is in the best interest of the customer to put their property on the market, release the equity they have in it and restore themselves to financial wellbeing.”

Charter Keck Cramer director of research and strategy Angie Zigomanis said Australia’s better-than-expected economic performance had so far kept a lid on forced sales.

Early predictions of a double-digit house price crash are now unlikely to materialise, he said, and buoyant prices have given heavily-indebted home owners a way to safely exit the market.

Source: Australian Banking Association

“If prices were to hold up, then that allows these people [on deferrals] to put their properties on the market without their bank taking possession of the home,” Mr Zigomanis said.

“However, in Melbourne, for example, people haven’t been able to buy property for six months, so you [might] find that six months out from now that demand starts to dissipate and we return to normal levels of buyer demand, [and] those deferrees could lose out.

“The question is, how much momentum will the economy have picked up once the mortgage deferral period comes to a definitive end?”