Paying off a home loan is tough, but some Victorian suburbs have a higher proportion of households under mortgage pressure than others.
Homeowners in a swath of outer Melbourne suburbs are facing more home loan pressure than anywhere else in Victoria.
A new report by digital property exchange platform PEXA Group and its demographics company Informed decisions (also known as .id) analysed residential settlement data across NSW, Victoria and Queensland from January 2020 to December 2024.
The document ranked each state’s suburbs and towns with the largest loan-to-value ratios (LVRs).
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LVRs compare the loan amount used to fund a property’s purchase against its total sale price, expressing the ratio as a percentage.
Cobblebank, in the Melton municipality of Melbourne’s west, placed top of the list with an 86.1 per cent loan-to-value ratio, based on a $623,500 median dwelling sales price and a $57,704 median deposit amount.
Kings Park near St Albans, Frankston North, Woodstock in the Whittlesea municipality and Hampton Park rounded out the top five areas, all with LVRs above 85 per cent.
Cranbourne, Cranbourne North, Gladstone Park near Tullamarine, Red Cliffs near Mildura and Seabrook, another suburb in Melbourne’s west, were also in the top 10.
Generally, the lower an LVR is, the less risk a bank views a home loan as having – with the NAB stating that an LVR above 80 per cent of a property’s value tends to indicate higher risk.
Suburbs with a higher average LVR usually have a larger proportion of homebuyers who are required to purchase lenders’ mortgage insurance (LMI).
Areas on Melbourne’s suburban fringe are among the suburbs facing the highest amount of home loan pressure. Picture: NCA NewsWire/David Crosling.
PEXA’s chief economist Julie Toth, who is also a panel member of the Reserve Bank of Australia’s roundtable of economists, said that areas with high LVRs were often dominated by first-home and younger buyers.
But she noted that Woodstock’s loans were mostly for vacant land, and that it was an area where tree-changers and older families might move to.
Ms Toth said that households with higher LVRs frequently borrowed up to the maximum rate they could afford from a bank, in order to secure a home.
“I think what it’s showing is people at lower price points, even though they are paying less, it’s an absolute struggle in pulling that deposit together, and they’re really pushing the upper limits of their lending capacity,” she said.
Interest rate cuts can have a more significant impact upon people with higher LVRs than homeowners with deeper pockets, she added.
PEXA Group’s chief economist Julie Toth said that many of the Melbourne suburbs with high loan-to-value ratios were areas with a lot of houses, as opposed to apartments and units.
The report found that it would take a single Victorian person, earning the state’s median $53,368 yearly income, a total of 12 years to save up a typical $87,747 home deposit of 15 per cent.
This was for the state’s median $663,000-priced home.
For NSW, a single person would need 18 years and three months to save a median $136,088 deposit.
This was based upon them earning the state’s median $59,622 yearly income and saving for a typically-priced $865,000 NSW home.
And a sole Queenslander would take 14 years to save up a $101,754 deposit, for a $650,000-median priced home, if they were earning that state’s typical $58,303 yearly wage.
The income figures used by PEXA were based on Australian Bureau of Statistics income data.
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