Borrowers in New South Wales are feeling the mortgage pinch the most as the rate rises impact their capacity to meet repayments.
This was the main finding of the latest Emerging Mortgage Risk report from PEXA, which explored the impact of rate hikes, steep house prices, and continued cost of living pressure on those who have recently purchased residential property from January 2020 to February 2023.
According to the report, 181 postcodes in New South Wales, representing 46.1% of all suburbs in the state, are at mortgage risk.
These suburbs are mainly concentrated in metropolitan areas, with nearly all the very high-risk postcodes located in Greater Sydney, including Northbridge, Dural, and Avalon Beach.
In Victoria, 74 postcodes or around 22.3% of suburbs reported a high mortgage risk. Metropolitan areas such as Balwyn, Balwyn North, and Canterbury had the highest instances of mortgage risk.
On the other hand, regional postcodes in Queensland were exposed to higher mortgage risk, specifically Noosaville, Maleny, and Tallebudgera.
Only around 19 postcodes in Queensland were at high mortgage risk, representing 8.7% of all suburbs in the state.
How much borrower repayments increased
Median loan repayments increased significantly since December 2020, with recent borrowers needing to fork out additional funds to meet their new repayments.
Based on PEXA’s projections, borrowers in New South Wales will need additional $15,985 per year to meet their loan repayments starting May 2023. This translates to 62.3% increase in mortgage repayments from December 2020.
The rate of increase was higher in Victoria at 67.3% or $13,327 additional repayments annually.
Borrowers in Queensland are also expected to shell out 67% more than what they spent in December 2020 in mortgage repayments, indicating an additional payment of $11,567.
PEXA head of research Mike Gill said the findings of the study goes to show how Australians are squeezing their budgets, with many households facing more immediate mortgage risk.
“In addition to these factors, with an estimated 800,000 fixed rate loans due to expire during 2023 – and reset at a significantly higher cost – it’s easy to see why refinance volumes are at a record high as mortgagees seek to strike a better deal. It’s clear that lending pressure is set to stay in the months ahead,” he said.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 STAR CUSTOMER RATINGS |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% |
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Collections: Mortgage News Interest Rates
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