New data from the Australian Banking Association (ABA) shows the number of deferred bank loans has fallen below 300,000, representing a reduction of 70 per cent since the peak of the pandemic period.
According to ABA CEO Anna Bligh the new data shows the economic recovery is gathering pace.
"This is an encouraging sign that most Australians are through the worst," Bligh said.
"Australian banks have played a major role in carrying the economic burden of the pandemic for their customers. The good news is that the majority are now bouncing back as they restart their loan repayments."
At the pandemic's peak more than 900,000 loans were deferred by Australian banks, with the majority being deferred by the country's seven largest banks.
According to the ABA's latest data to 4 November, home loan deferrals by the seven largest banks are down to fewer than 145,000.
Business loan deferrals have also fallen to fewer than 73,000, while SME loan deferrals are down to around 65,000.
Bligh expects the number of loans on hold to fall further in coming weeks but reiterates customers should contact their bank if financial difficulty is proving to be a problem.
"It's great to see a lower than expected number of people needing to extend their deferral period," Bligh said.
"Don't wait till you are in over your head, talk to your bank, they'll help you find a way through this. Don't tough it out on your own."
The value of deferred loans by the seven largest banks has now fallen below $100 billion down to $86 billion. This figure peaked at more than $250 billion in June.
Updated at 12.53pm AEDT on 18 November 2020.