Households and small businesses are now paying back 80% of the $250 billion in loans deferred at the height of the pandemic, with new figures revealing the national economic recovery is on track.

Australian Prudential Regulation Authority data shows the value of deferred home loans fell $7 billion in December to $43 billion, a large reduction from the peak total in May 2020 of $192 billion.

Federal Treasurer Josh Frydenberg says the figures show “the substantial and continuing reduction in deferred loans” is a positive sign that Australia’s economic recovery is under way.

“The value of deferred housing loans has now fallen by almost 80% since their peak in May while the value of deferred small business loans is around 90% lower than at their May peak,” he says.

“As more households and ¬businesses resume loan repayments, banks are in an even stronger position to continue lending in support of the economic recovery by helping those wanting to buy a home, invest or grow their business.”

The APRA update reveals that, by December 31, the value of loan deferrals for small and medium enterprises had dropped from a peak of $56 billion to $6 billion.