Australians are set to be hit by further interest rate hikes and soaring costs of living with a new analysis revealing which suburbs across the country may be most at risk of losing their homes.
Falling house prices are also expected to impact financially distressed homeowners, with international credit agency Moody’s Investors Service revealing zip codes where borrowers are 30 days or more behind on their mortgage payments.
It comes as Westpac made a chilling prediction that interest rates will rise to 3.1% in November and continue to rise to 3.85%.
Moody’s Investors Service mapped suburbs where borrowers fell behind on payments at triple the rate of the national average.
Struggling suburbs that feature in his analysis include Bidwill in western Sydney, Burnside in Melbourne, Burpengary in Brisbane, Mawson Lakes in Adelaide and Alexander Heights in Perth.
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Interest rates, which have already increased six times this year to 2.6%, have reached their highest level in nine years and should continue to climb this year according to all the major banks.
Australians are also being beaten by the highest inflation in 32 years.
But rising interest rates will pose the greatest risk to mortgages with high balances and where payment amounts are close to borrowers’ maximum repayment capacity, said Alena Chen, vice president of Moody’s Investors Service. .
“Falling home prices will increase the risk of delinquencies and defaults on home loans, as the weakening housing market will make it more difficult for financially distressed borrowers to sell their properties at sufficiently raised to pay off their debt,” she added.
“During the September quarter of 2022, house prices fell by 6.1% in Sydney, 3.7% in Melbourne and 4.1% on average across Australia.”
When the Reserve Bank of Australia (RBA) raised rates to an all-time low of 0.1% in May for the first time since 2010, 1.2% of Australian residential mortgages were 30 days or more past due. more, according to Moody’s data.
But more than three percent of borrowers were behind on their repayments on the outskirts of major cities.
Homeowners struggling to meet their monthly repayments are particularly at risk in south-west Sydney, where 1.77% of mortgages are in arrears.
Fairfield was one of the hardest hit with 2.55% of borrowers being 30 days or more past due.
The mortgage default rate for the western Sydney suburb of Bidwell is 3.22%, higher than the 1.28% for the wider Blacktown area.
Meanwhile, the Melbourne suburb of Burnside recorded 2.32 per cent homeowners behind with their payments, well above the North West region average of 1.53 per cent.
It appears that even apartment owners are struggling with Central Melbourne’s mortgage arrears rate of 3.53%, more than double that of Central Melbourne’s 1.32%.
In Perth, the suburb of Bayswater saw 2.78% of borrowers late with their repayments, while Alexander Heights was even higher at 3.12%.
The northern Morteon Bay area of Brisbane had the highest mortgage default rate in the Queensland capital at 1.52%, although in suburbs such as Burpengary it was more than double at 3.01%.
In North Adelaide, 1.62% of borrowers are at least a month overdue, but suburbs such as Mawson Lakes have seen homeowners in greater distress with a 2.89% rate of mortgage arrears.
On a regional basis, the Northern Territory had the highest arrears rate of 2.46%.
Even when it comes to capital cities, Darwin had the highest crime rate at 2.6%, followed by Perth at 1.7%, then Adelaide at 1.24% and Melbourne at 1.22%.
Mortgage stress was lower in Brisbane at 1.09%, Sydney at 1.01%, Hobart at 0.84% and Canberra at just 0.66%.
The data also revealed suburbs where no homeowners were struggling, such as Crows Nest on Sydney’s Lower North Shore which had a zero arrears rate, as well as North Turramurra on Sydney’s Upper North Shore.
Commonwealth Bank, NAB and ANZ expect the spot rate to be raised by 0.25% at RBA board meetings in November and December.
This would take rates to 3.1% by the end of the year.
ANZ also predicted interest rates would hit 3.85%, which could mean repayments would rise by more than $1,000 a month for all mortgages over $500,000 paid off over 25 years.