Top 10 suburbs set to face highest mortgage stress after rate hike


Today’s cash rate hike is expected to affect areas in Australia’s largest cities and a number of regional hotspots across NSW.

Homeowners in NSW and Victoria are set to be hardest hit by the RBA’s historic interest rate hike, with affluent suburbs set to be hit hard by soaring interest rates.

Finder compared average monthly mortgage repayments with monthly household incomes for suburbs across Australia to determine the 10 most mortgage-stressed suburbs.

Comparison website analysis found homeowners in Sydney’s Darlington have the greatest potential for mortgage stress, with the average home loan repayment accounting for 105% of average household income.

Blairgowrie (88%), a seaside town south of Melbourne’s CBD, and Mullumbimby (85%) near Byron Bay are also expected to come under similar pressure, with repayments accounting for a considerable share of average monthly income.

The chart calculated the average house price for each suburb based on recent home and unit sales. Suburbs in the top 20% of household incomes were also excluded from the list.

The study has some limitations, such as the inability to discern how many houses in a suburb are not owned by residents and higher rates of retirees affecting income data.

The data also uses household income figures recorded six years ago from the 2016 census.

The full list of the hardest hit suburbs can be viewed below.

Social housing advocacy group Everybody’s Home surveyed more than 52,000 households across Australia to find out which suburbs were most at risk of falling behind in mortgage repayments.

He revealed that the Labor headquarters of Chifley in Sydney, which includes Mount Druitt and Rooty Hill, recorded 73.6% of households in stress.

Mitchell’s most affluent electorate, currently held by the Liberal Party, which includes the suburbs of Baulkham Hills and Winston Hills, has a high stress rate with 73% affected.

In Sydney’s south, 70% of mortgage holders in Barton’s Labor headquarters, which covers Rockdale and Hurstville, are also in mortgage trouble.

Financial stress was defined as having less than 5 percent of income remaining after expenses.

Australia hit by historic rate hike

The RBA’s announcement marks the first rate hike in 11 years – since November 2010 – and is a desperate attempt to quell soaring inflation, which has hit an annual rate of 5.1% and has climbing prices at the fastest rate in two decades. .

While a rate hike was widely expected, most pundits were predicting a much more modest 15 basis point increase.

St Vincent de Paul Society National President Claire Victory has criticized the fact that the lowest paid Australians have suffered another blow ahead of the federal election.

“Today’s rate hike will be another kick in the teeth for Australians living in poverty, who are already pushing every dollar to its limit,” Ms Victory said.

“The soaring cost of living, the shortage of affordable housing, increasingly precarious work and stagnating wages are making it virtually impossible for a growing number of Australians to survive.”

The PLA was quick to put the boot on the prime minister after Tuesday afternoon’s announcement.

“It was hard enough to make ends meet under Scott Morrison and today it has become even harder for millions of Australians,” Labor leader Anthony Albanese and shadow treasurer Jim Chalmers said in a statement. joint press release.

“Even before today’s decision, Australians faced a real cost of living crisis on his watch.

“Scott Morrison’s economic credibility was already in tatters, now it’s completely shredded.”

Although a rate hike to 0.25% is relatively minor, economists believe the RBA won’t stop there, with some pundits predicting interest rates will hit 2.5% by the end of 2022 .

In fact, Nomura Australia’s Senior Economist and Rates Strategist Andrew Ticehurst recently said The Daily Telegraph they believe that the interest rate will be increased every month until December, which means that we could have a rate increase every month until Christmas.

According to comparison site Rate City, a rate hike to 0.25% would result in repayments jumping $39 for the average homeowner with $500,000 debt and 25 years remaining – a figure that will jump to $511 per month if the cash rate continues. rise to 2%, as expected.

Rate City’s research director, Sally Tindall, said borrowers “should be aware that the RBA won’t stop at just one hike.”

“The RBA is likely to raise the cash rate several times over the next six to 12 months as it works to bring inflation under control,” she explained.

“If the cash rate reaches 2% by May next year, someone who owes $500,000 on their loan today and has 25 years left could be looking at a total increase in their monthly repayments of $511. .

“This is going to be a lot for many borrowers to swallow, especially for those who are already struggling to squeeze monthly budgets.

“Floating rate borrowers don’t have to put up with these RBA hikes. If you haven’t had a mortgage health check recently, now is the time to do it.

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