Australia’s worst postcodes for mortgage stress are much more likely to be in Melbourne or Perth than Sydney.
Credit ratings agency Moody’s Investors Service has revealed the 20 worst suburbs when it came to borrowers being 30 days or more behind on their monthly mortgage repayments.
Almost half, or nine, of them 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 mortgage delinquencies had risen in every state and territory of Australia, with lower-income areas the worst affected, particularly in outer-suburban areas.
‘We expect delinquency rates will continue to rise moderately through to 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 delinquency rates are rising broadly across Australia, this is most pronounced in regions where median household income is in the bottom third of the state.
‘These regions are also typically outside metropolitan areas.
‘Mortgage borrowers in these areas are bearing the brunt of high interest rates and inflation.’
Outer suburban areas of Melbourne in the city’s west and south-east dominated the list.
But the worst-affected area overall was right in the centre of Melbourne where there is a greater concentration of high-rise apartment towers.
In the 3000 postcode, covering inner Melbourne, 4.87 per cent of borrowers were in arrears – triple 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 behind on their mortgage.
Geelong, south-west of Melbourne, was third on the list with four per cent of borrowers overdue in the suburb of Bellbrae.
Sydney didn’t enter the list until 15th place with 3.31 per cent of borrowers in a delinquent situation in Currans Hill, near Campbelltown, in the city’s outer south-west.
Adelaide’s north was on the list in 18th place with 3.21 per cent of borrowers in Paralowie behind on their repayments.
Regional areas were also on the list with Albany in 11th place, with 3.51 per cent of borrowers in this coastal town south of Perth in arrears.
Belgravia, north-west of Orange in the New South Wales central west, was in 17th spot with 3.23 per cent of borrowers behind.
But Melbourne dominated the list with higher arrears rates also in Albanvale, Eltham, Calder Park, Pakenham, Wollert, South Wharf, Cardina and St Kilda.
Perth was next, with higher arrears also at Balga, Alexander Heights, Embleton and Gosnells.
The figures were from May 2023 when the Reserve Bank raised interest rates for the 11th time in a year to 3.85 per cent.
The cash rate rose again in June to an 11-year high of 4.1 per cent, marking the most aggressive pace of monetary policy tightening since 1989.
But with unemployment still low at 3.7 per cent, mortgage arrears were only expected to rise moderately.
‘Despite the increased strain on mortgage borrowers from high interest rates and inflation, we expect mortgage delinquency rates will only rise moderately for the rest of this year because of low unemployment and recovering housing prices,’ it said.
Inflation in August edged up to 5.2 per cent, from 4.9 per cent in July, putting the consumer price index further above the Reserve Bank’s 2 to 3 per cent target and increasing the prospect of another rate rise.
The worst-affected area overall was right in the centre of Melbourne where there is a greater concentration of high-rise apartment towers (Docklands pictured). In the 3000 postcode, covering inner Melbourne, 4.87 per cent of borrowers were in arrears – triple the national average of 1.57 per cent
When it came to suburbs with the lowest arrears rates, Brisbane took out nine out of 20 spots with all these postcodes having delinquency rates under 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 place, with Ainslie having a zero arrears rate, 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 northern NSW had one place with Banora Point.
Australia’s worst postcodes for mortgage arrears
1. MELBOURNE, 3000
2. BYFORD, 6122, Perth south-east
3. BELLBRAE, 3228, Geelong
4. BALGA, 6061, Perth north-west
5. ALBANVALE, 3021, Melbourne west
6. ELTHAM, 3095, Melbourne north east
7. CALDER PARK, 3037, Melbourne west
8. ALEXANDER HEIGHTS, 6064, Perth north-west
9. PAKENHAM, 3810, Melbourne south-east
10. WOLLERT, 3750, Melbourne north-east
11. ALBANY, 6330, Western Australia south-west
12. EMBLETON, 6062, Perth north-east
13. SOUTH WHARF, 3006, Melbourne inner
14. GOSNELLS, 6110, Perth south-east
15. CURRANS HILL, 2567, Sydney outer south-west
16. CARDINA, 3978, Melbourne south-east
17. BELGRAVIA, 2800, New South Wales central west
18. PARALOWIE, 5108, Adelaide north
19. FAIRFIELD, 2165, Sydney south-west
20. ST KILDA, 3182, Melbourne inner