Where mortgage holders are under the most financial stress in Melbourne

Experts reveal where Melburnians are under the most financial stress when it comes to keeping up with their mortgage repayments. Find out what a rate rise means for every area.

Thousands of Victorians are facing mortgage stress, eating into their savings to meet their loan commitments.

Thousands of Victorian mortgage holders are digging into savings and cutting back essential spending to keep up with loan repayments as the cost of living soars.

And with the prospect of thousands more families further tightening their belts if the Reserve Bank of Australia hikes interest rates next week, the state’s hardest-hit areas can be revealed in new figures from Digital Finance Analytics.

They estimate a staggering number of mortgage-holding households are already struggling with their finances in the face of higher interest rates.

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One of the worst-hit areas in Melbourne was Moonee Valley, where research estimates 10,540 out of 11,890 mortgage-holding households were under stress, with a potential 0.25 per cent rise in interest rates likely to send another 500 households into financial stress.

This area alongside Banyule and Whittlesea are among the nation’s 20 hardest-hit municipalities.

The research defines mortgage stress as the number of mortgage-holding households with a negative cash flow, so they are not able to keep up with mortgage payments and other essential spending through income alone.

Homeowners usually prioritise their mortgage repayments, but as minimum repayments increase, many households are cutting back on imperatives such as dental care, quality food and even school fees.

The RBA may hike the cash rate at its Melbourne Cup Day meeting.

Digital Finance Analytics principal Martin North said the banks had been “too generous” putting homeowners in difficult positions today.

“I also blame the RBA and government. The stress is a direct result of policy,” Mr North said.

“Another factor is too high migration, which again is a deliberate policy (and) again is driving prices higher propping up GDP.”

But even if the RBA decides to notch interest rates up by 0.25 per cent or more on Melbourne Cup Day, Mr North said the longevity of higher rates would cause the most damage to households.

“The current cash rate at 4.1 per cent is enough to create a slow train wreck,” he said.

“Households cut back, seek to refinance or restructure, but it won’t be enough. The banks are putting pressure on households to get out.”

The three-bedroom home at 1/91 Park Road, Eltham in the City of Banyule is up for sale.

It has $950,000-$990,000 price hopes listed with Buckingham & Company Estate Agents Diamond Valley.

Little Real Estate executive general manager in sales and marketing James Kirkland said after four months of the RBA holding the cash rate at 4.10 per cent which had built up buyer confidence, it would be “irresponsible” to raise it on Tuesday.

“Near weeks away from the holiday season, if there are homeowners that do need to come to market because of mortgage stress, they’re going to run out of time,” Mr Kirkland said.

“I think it’s irresponsible of the RBA to put it up on Tuesday and then have even an inkling of putting it up in December.

“Homeowners simply won’t have the time to go to market to transact until the New Year.”

The three-bedroom home at 59 Hillsyde Pde, Strathmore in the City of Moonee Valley is up for sale.

It has $1.2m-$1.3m price hopes listed with Jellis Craig Moonee Valley & Kensington.

Jellis Craig Moonee Valley and Kensington director Chauntel Considine said she had seen a slight uptick in turnover of “mum and dad investors” selling off properties recently.

But those who were coming off fixed-rate loans in the next few months had yet to felt in the market, she said.

“Maybe in February, March, April (next year), once they’ve had a few (repayments) going from 1.9 per cent to 5.5 per cent; people will start to say we’ve had enough of this with the cost of living, maybe we’ll move it on,” Ms Considine said.

Mortgage Choice broker David Thurmond said almost half his clients would come off their fixed-rate period within the next six months.

“Those clients have yet to experience this higher rate world the rest of us are living in,” Mr Thurmond said.

“They’re going from 2 per cent up to potentially 6.25 per cent, 6.5 per cent. It’s going to be a massive shock to the system.”

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