Victorian suburbs facing worst mortgage stress as interest rates rise

An interest rate rise is set to tip struggling homeowners over the edge, with suburbs in Melbourne’s southeast worst hit. Find out how your area ranks.

Jason Fay and Charlotte Muffatti are concerned over rising interest rates and mortgage stress. Picture Rebecca Michael.

An interest rate hike is set to tip struggling homeowners over the edge, with suburbs in Melbourne’s southeast worst hit.

The Reserve Bank of Australia increased the interest rate on Tuesday for the first time in a decade in response to soaring inflation.

Governor Philip Lowe announced the cash rate had been raised from 0.1 per cent to 0.35 per cent.

This comes as a report by Digital Finance Analytics and online home loan marketplace Joust revealed that mortgage stress was highest in Victoria in seven southeast postcodes, including 3805, 3806, 3810, 3977, 3199, 3178 and 3802.

Narre Warren South topped the list with 10,027 households now in mortgage stress as data showed a 0.5 per cent increase would tip another 363 households into trouble.

This was followed by 8689 in Berwick, 7988 in Pakenham, 6611 in Cranbourne, 5785 in Frankston, 5231 in Rowville and 4179 in Endeavour Hills.

Others suburbs stretched to the limit were Ballarat East, Tarneit, Sydenham, Derrimut, Doreen, Roxburgh Park, Epping, Reservoir, South Morang, Glenroy and Traralgon.

Suburbs under little or no mortgage stress included Thornton, Bealiba, Pine Grove, Surrey Hills, Toorak, Oakleigh South, Ferntree Gully, Lorne, Apollo Bay and Nagambie.

Joust chief executive Carl Hammerschmidt said young, first time homeowners were impacted the most.

“Our data shows that when it comes to demographic-based mortgage stress, younger, often first-time buyers are being hit the hardest,” he said.

“Many of these bought in the high-growth development corridors around major urban centres, such as the southeast and northwest of Melbourne.”

Mr Hammerschmidt said the number of households battling mortgage stress was concerning.

“There is a whole generation of borrowers who have never seen a rate rise,” he said.

“As we go into a cycle of potentially multiple increases over 12 to 18 months, combined with the pressures of growing cost-of-living, this is concerning for literally hundreds of households across the country.

“That is why it is important that borrowers are consistently shopping around to ensure that they have the best rate possible from their existing lender.”

The data, based on a survey of 52,000 households, revealed that 1.5 million households were battling to meet their repayments across Australia – including 44 per cent of Victorian homeowners.