Victorian postcodes experiencing greatest mortgage stress

by Miklos Bolza22 Dec 2016
Around 34% of the top 100 postcodes most at risk of mortgage default lie in Victoria, according to the latest statistics from Digital Finance Analytics (DFA).
 
In his analysis, principal of DFA Martin North looked at mortgage stress as well as estimates about the likelihood of default in different postcodes Australia.
 
“We’ve chosen to look at the actual number of households this represents. This is because there are a number of postcodes where the percentage is very high but it’s off a very low number of households,” North said in a video blog.
 
“Statistically speaking, such low numbers would make us less certain of the accuracy of the estimates but by choosing to focus on the absolute number of households involved, the estimates are more firmly grounded.”
 
Despite the fact that Victoria containing a large proportion of stressed postcodes, DFA analysis found the risk of default was higher in other states.
 
The highest level of actual default risk was found in regional Western Australia. The top postcode for this was Lamington (6430): an area containing Kalgoorlie which is found around 550 km east of Perth.
 
“Many of these households are in the younger age segments but incomes are higher than the WA average,” North said. “Here, more than 2,600 households are in mortgage stress and more than 200 are likely to default.”
 
Harristown in Queensland (4350), a postcode around 110 km west of Brisbane containing Toowoomba with a population of around 60,000, had the highest number of stressed households in Australia.
 
“Many of the households here are younger, incomes are lower than the Queensland average, more than 4,500 households there are in difficulty and more than 170 households in the district risk mortgage default,” North said.
 
In the top 20 most stressed suburbs, Western Australia had the largest number of households with 26.4% of the total). This was just ahead of Victoria (26.38%) but off a smaller population.
 
“This shows the pressure on households in the west,” he said.
 
North summarised saying that younger households and those in Western Australia or in regional Queensland were most at risk of default.
 
“The main question for the next two months will be the extent to which mortgage rates rise. We think households will face higher repayments in 2017.”
 
“This may hit many hard. So whilst a proportion of households are in no trouble at all and may well have paid ahead, others are in significant difficulty and for them 2017 looks like being a challenging year.”
 
If these predictions are correct, North said this means banks will face higher losses on their mortgage books next year.
 
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