Australia’s worst postcodes for mortgage stress are much more likely to be in Melbourne or Perth than Sydney.
Credit rating agency Moody’s Investors Service has revealed the 20 worst suburbs when it comes to borrowers who are 30 days or more behind on their monthly mortgage repayments.
Nearly half or nine of these are in Melbourne, with one in nearby Geelong, five in Perth, one in Adelaide, two more in regional areas and surprisingly only two in Sydney, Australia’s most expensive property market.
Moody’s analysts Alena Chen and Philip Au noted that mortgage delinquencies had risen in every state and territory of Australia, with lower-income areas hardest hit, especially in the suburbs.
“We expect defaults to continue rising moderately until the end of this year as high interest rates and cost-of-living pressures further erode household savings,” they said.
Australia’s worst postcodes for mortgage stress are much more likely to be in Melbourne or Perth than Sydney
“While mortgage delinquencies are rising across Australia overall, this is most pronounced in regions where median household incomes are in the bottom third of the state.
‘These regions are usually also located outside metropolitan areas.
‘Mortgage lenders in these areas are being hit hard by high interest rates and inflation.’
Melbourne’s suburbs in the city’s west and south-east dominated the list.
But the worst affected area was right in the center of Melbourne, where there is a greater concentration of high-rise residential towers.
In the 3000 postcode, which covers inner-city Melbourne, 4.87 per cent of borrowers were in arrears – three times the national average of 1.57 per cent.
In second place was Byford, in Perth’s south-east, with 4.74 per cent of borrowers in arrears on their mortgages.
Geelong, southwest of Melbourne, was third on the list with four per cent of borrowers in arrears in the suburb of Bellbrae.
Sydney only came in 15th, with 3.31 per cent of borrowers in a delinquent situation in Currans Hill, near Campbelltown, in the city’s far south-west.
Adelaide’s north ranked 18th, with 3.21 per cent of borrowers in Paralowie behind on their repayments.
Regional areas also made the list, with Albany in 11th place, with 3.51 per cent of borrowers in this coastal town south of Perth in arrears.
Belgravia, northwest of Orange in New South Wales’ central west, ranked 17th with 3.23 per cent of borrowers behind.
But Melbourne dominated the list with higher arrears, including in Albanvale, Eltham, Calder Park, Pakenham, Wollert, South Wharf, Cardina and St Kilda.
Perth was next, with higher payment arrears, also at Balga, Alexander Heights, Embleton and Gosnells.
The figures date from May 2023, when the Reserve Bank raised interest rates for the eleventh time in a year to 3.85 percent.
Cash rates rose again in June to an 11-year high of 4.1 percent, marking the most aggressive pace of monetary policy tightening since 1989.
But with unemployment still low at 3.7 percent, mortgage arrears were expected to rise only moderately.
“Despite increased pressure on mortgage borrowers due to high interest rates and inflation, we expect mortgage defaults to increase only moderately for the remainder of this year due to low unemployment and the recovery in house prices,” it said. report.
Inflation rose to 5.2 percent in August from 4.9 percent in July, pushing the consumer price index further above the Reserve Bank’s 2-3 percent target and raising the prospect of another rate hike.
The worst affected area was in central Melbourne, where there is a greater concentration of high-rise residential towers (Docklands in the photo). In the 3000 postcode, which covers inner-city Melbourne, 4.87 per cent of borrowers were in arrears – three times the national average of 1.57 per cent
When it came to the suburbs with the lowest payment arrears, Brisbane secured nine of the 20 spots, with all of these postcodes having a payment arrears rate of less than 0.5 per cent.
Macgregor, Holland Park, Cannon Hill, Rochedale, Bowen Hills, Jamboree Heights, Aspley, Thomlands and Bray Park appeared on the list, while Logan and Moreton Bay were included.
Melbourne had three spots, Hughesdale, Northcote, Brunswick, but Sydney had four spots, including Leichhardt, Lane Cove, Engadine and Grays Point.
Canberra had one locality, with Ainslie having no arrears, while nearby Bimberi, just outside the Australian Capital Territory, was also on the list.
The Gold Coast had one place, with Helensvale, while a short drive away in northern NSW had one place with Banora Point.