One in 100 homeowners in the state struggles with loan repayments overdue by a month or more
Victoria holds the unenviable distinction of having Australia's most strained mortgage landscape, with data from S&P Global Ratings and analysed by realestate.com.au revealing that 1% of the state's housing loans are currently overdue by at least 30 days.
While Northern Territory (1.21%) and the Australian Capital Territory (1.06%) registered higher mortgage arrear rates, Victoria and New South Wales are the only states with suburbs included in the highest-arrears list.
The news coincides with the federal government's decision to expand the First Home Guarantee scheme last month, allowing all first-home buyers across the country to buy a home with a 5% deposit without expensive lenders mortgage insurance (LMI)
Analysis suggests that first-time purchasers accessing this expanded guarantee scheme may face material risk exposure should economic conditions deteriorate or interest rate movements occur, given the elevated leverage involved in borrowing up to 95% of a property's purchase price.
Melbourne accounts for six of the nation's ten postcodes with the highest arrears rates, a pattern that has persisted for 18 months. Craigieburn (3064) sits atop the rankings, with approximately one in every 33 mortgage holders running behind schedule. Pakenham (3810) occupies third position with 2.41% of loans in arrears during the September quarter. Hoppers Crossing, Werribee, Frankston and Melton South also feature prominently in the national rankings, each showing arrears rates between 1.59 and 1.7%.
New South Wales, which records a statewide arrears rate of 0.92%, claims the remaining four positions. These include Baulkham Hills (2153) at 2.48%, Casula (2170) at 2.27%, Berkshire Park (2765) at 2.2%, and Camden (2570) at 1.52%.
The trajectory has improved marginally since the Reserve Bank commenced monetary easing in February.
Erin Kitson (pictured right), credit analyst at S&P Global Ratings, noted that "quite a close connection" exists between mortgage performance and residential price appreciation. She explained that Victoria's comparatively sluggish property value development over recent years has constrained homeowner capacity to reallocate debt or refinance their obligations, particularly where household equity remains modest.
"I think the high property taxes for investors has had an effect, having caused greater cash flow problems for investors," Kitson said.
She also cautioned that the expanded First Home Guarantee presents latent vulnerabilities. "Any increase in household indebtedness, particularly if they are younger and don't have savings buffers or a secondary property, that puts them in a more vulnerable position when the rate cycle changes direction," she said.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
