West Sydney and West Melbourne are major mortgage stressful suburbs


The suburbs of Melbourne and western Sydney experience the highest mortgage stress rates in the country.

Postcode data analyzed by Digital Finance Analytics (DFA) and commissioned by consumer group CHOICE shows there are more than 130,000 stressed households in the top 10 suburbs of New South Wales and Victoria.

Mortgage stress can be loosely defined: while some compare it to 30% of pre-tax income spent on housing, DFA defines it as “when household cash flows are negative and the money coming in is not enough to cover the cost of mortgage payments and other expenses. ”

Based on this definition, the number of households in New South Wales’ most stressed suburbs reached 63,502 in April, while Victoria reached over 70,000.


Buying a house or looking to refinance? The table below presents home loans with some of the lowest interest rates on the market for homeowners.

Basic criteria: a loan amount of $ 400,000, variable, fixed, principal and interest (P&I) mortgage loans with an LVR (loan to value) ratio of at least 80%. If the listed products have an LVR

Where are the mortgage stress hot spots in Australia?

The country’s top 10 suburbs for mortgage stress include the New South Wales, Victoria, Queensland and Western Australia suburbs, but the top two dominate the list.

The postcode with the most households under stress is 2560 with 10,578, encompassing western Sydney suburbs like Campbelltown.

The New South Wales postcode 2170 in the Liverpool area also took second place with almost exactly 10,000 households under stress.

WA postcode 6065 came in third with 9,889 stressed households, and Queensland’s 4350 in Toowoomba came in third (9,693).

Although they did not rank in the top four, the Victorian suburbs occupied places five to nine:

  • 3805
  • 3806
  • 3029
  • 3350
  • 3037

See also: Half of low-income tenants are now in rental stress

No Time to Release Responsible Lending, Says CHOICE

DFA reported that mortgage stress actually eased in 2020, due to COVID-19 mortgage deferrals that eased pressure on household budgets, before increasing again in early May 2021.

Now that those repayment deferrals are complete, along with the federal government’s plan to scrap various responsible lending laws, CHOICE CEO Alan Kirkland has said it’s time for the government to abandon this plan.

“These are households where, from fifteen to fifteen days, people spend more than they earn,” Kirkland said.

“That means they have to make tough choices, like putting food on the table or keeping track of repayments. If they can’t keep up the act of juggling, they risk losing their home.

“Loan security laws have been put in place to prevent the enormous damage to families and communities from mortgage stress – by forcing banks to avoid giving loans to people they cannot afford.” to repay.

“If the government gets away with its plan to abolish secured loan laws, people who are desperate to enter a booming real estate market will be at risk of overexposure and people who need to refinance will not be. not sufficiently protected. “

Related: 125 Organizations Write Letter Opposing Plan to End Responsible Lending Laws

The plan to overturn some of these responsible lending laws recently met with a roadblock in the form of One Nation, with leader Pauline Hanson saying she would not support the repeal as she would. “against the best interests of millions of Australians “.

“The government is almost giving the big banks carte blanche and allowing them to self-regulate using the weak and selfish bank code of conduct that does not offer strong consumer protection or responsible lending provisions,” the senator said. Hanson. The Australian Financial Review Last week.

The Central Alliance can also vote against repealing responsible lending.

“We are pleased to see more and more senators – most recently Senator Hanson – standing up to the banks and the government,” Kirkland said.

“A lot of people still do tough things and need laws that protect them from bad banking behavior that led to the Royal Banking Commission.”

Treasurer Josh Frydenberg first said easing credit laws would help recovery from COVID-19 in Australia.

“As Australia continues to recover from the COVID-19 pandemic, it is more important than ever that there are no unnecessary obstacles to the flow of credit to households and small businesses,” said said Frydenberg.

“Maintaining the free flow of credit through the economy is essential to Australia’s economic recovery plan.”

60% of parents are ready to help their children buy

With mortgage stress related to the inability to pay off the mortgage, due to high interest rates, unaffordable property, or the borrower’s income, there might be concern about the number of prime buyers who borrow with the help of their parents.

The Bank of Mum and Dad recently became the 9th largest lender in Australia, and a Mortgage Choice study last week found that 60% of parents would be willing to offer or lend money to their children to help them. to buy a property.

Meanwhile, more than half (53%) said they would act as a guarantor, and 45% would consider using their home equity to finance the purchase of a child’s home.

While acting as a guarantor can be risky as the guarantor becomes responsible for repayments in the event of a default, Mortgage Choice CEO Susan Mitchell said the numbers were good news for young home buyers.

“As parents, we are used to doing what we can to help our children reach their goals,” Ms. Mitchell said.

“In such a phenomenally growing housing market, it is perfectly understandable that parents are looking for ways to help their children buy a home, either as a guarantor or by giving them a gift for their loan deposits. immovable.

“Entering the market with a guarantor loan means that parents won’t have to give their children money. Instead, they can use the equity accumulated in their home.”


Photo by Elton Sa on Unsplash

The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes retail products from at least the Big Four banks, the top 10 customer-owned institutions and Australia’s largest non-banks:

Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website.

For the sake of full disclosure, Savings.com.au, Performance Drive, and Loans.com.au are part of the Firstmac group. To find out how Savings.com.au handles potential conflicts of interest and how we are paid, please click on the links on the website.

*Comparison rate is based on a loan of $ 150,000 over 25 years. Please note that the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redistribution fees and cost savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.


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