Research reveals postcodes where 1.3 Aussies are under mortgage stress

More than 1.3 million Australians are now experiencing mortgage stress, including those in typically affluent areas. See how your suburb compares.

One in five Australian homeowners are now experiencing mortgage stress, with low and high earners – as opposed to those on average incomes – the hardest hit.

Almost a quarter of Aussies earning between $1133-$1792 a week (24 per cent) are now struggling with loan repayments, as are 28 per cent of people earning $3300-$4644 a week, new research from online financial advice provider Otivo revealed.

Yet of those on middle incomes ($2217-$2400 a week), the rate of stressed mortgage holders dips slightly to 22 per cent.

Mortgage stress occurs when more than 30 per cent of a household’s income is spent on home loan repayments.

About 40 per cent of homeowners in Brisbane’s New Farm are experiencing mortgage stress, new research by Otivo shows. Picture: Brendan Radke

The report, which was done with Microburbs, also revealed the postcodes where more than 1.3 million Australian households are struggling.

That tally is up about 100,000 from last year.

Residents of south west Sydney postcode 2111, which includes Lakemba, Melbourne’s Flemington (postcode 3031) and Ascot in Brisbane (4007) are the worst affected, with more than 50 per cent of households experiencing mortgage stress, the data showed.

The hardship flows into typically more affluent suburbs, with Sydney‘s Dulwich Hill (2203), Melbourne’s Caulfield East (3145), Brisbane’s Ashgrove (4060) and Perth’s Applecross (6153) rating as some of the worst hit.

On Tuesday the Reserve Bank lifted the cash rate for the ninth consecutive time to 3.35 per cent, a jump from 3.1 in December and up from 0.1 in April last year.

The last time Australia had an official cash rate close to this was November 2012 when it was 3.25 per cent.

Otivo founder Paul Feeney said the data showed financial stress was widespread and expects the rates of mortgage stress to increase “exponentially” this year as 800,000 owner occupiers come off their fixed low rates this year.

Paul Feeney, founder of online financial advice business Otivo. Picture: Supplied

Mr Feeney households with an average mortgage of $600,000 would need to find an extra $1625 a month.

“The compounding effect over the next 12 months is going to be enormous. It’s going to affect discretionary spending, such as takeaway and dining out, which in turn affects small businesses,” he said.

He suggested Aussie mortgage holders, especially those about to come off fixed rates, try to divert about five per cent of their expenses into savings to create a buffer and contact their lender now.

Ray White Chief Economist Nerida Conisbee said first homebuyer suburbs, typically areas with house and land packages, “would be experiencing the most stress” from rising interest rates.

“It’s so stressful at the moment, when the average mortgage repayments up $1000 a month since the increases started,” she said.

Mortgage Choice broker James Algar said he was approached daily by homeowners who were worried about their repayments, especially those coming off fixed rates.

Mr Algar advised those feeling the pinch or nearing the end of their fixed rate periods to get in contact with a mortgage broker to find a better deal.

“The worst thing anyone can do is nothing. Burying your head in the sand is not the solution,” he said.

Elizabeth Delaney, of Brisbane is renting out her spare room to help with mortgage repayments. Picture: Supplied

Last year, Elizabeth Delaney bought an apartment in Toowong, Brisbane, where 19 per cent of households are experiencing mortgage stress, according to Otivo’s report.

The 29 year old has found managing her finances in recent months increasingly difficult and rents out her spare room to help with repayments.

“I’m on a fixed interest rate but a lot of other aspects have gone up – insurance, water rates, council rates and general cost of living,” she said.

“My vision for improving the apartment has had to change because it‘s a lot more expensive to get tradespeople out.”

Originally published as Research reveals postcodes where 1.3 Aussies are under mortgage stress