Soaring interest rates and cost of living hikes have created Sydney pockets where close to every homeowner is under mortgage stress – spending more on their essential expenses and monthly housing costs than they are earning.
And another interest rate increase – expected to be announced next week – could push an alarming number of households over the edge.
From Campbelltown to Randwick, new data has revealed where Sydneysiders are finding it hardest to cope with living costs.
Outer ring suburbs, largely within the Blacktown area, featured heavily among the top mortgage stress suburbs, including Stanhope Gardens, Dean Park and Mount Druitt, according to survey data from Digital Finance Analytics.
RELATED: Jackie O’s cunning $30m exit plan amid Kyle split
One-hundred per cent of residents in a number of Sydney suburbs were found to be experiencing mortgage stress. Picture: Campbelltown City Council
Digital Finance Analytics data scientist Martin North said mortgage stress was high in high-growth, new suburbs around urban centres, where many homeowners were new purchasers.
“Plus, many disadvantaged families live across the fringe areas, and we see many new migrants also caught,” he said.
“Most cohorts are in the same boat, but young growing families, new migrants and first time buyers are worst hit.”
It comes as additional national polling from comparison group Finder revealed nearly one in 10 homeowners would default on their loans with just one or two more interest rate hikes, while 18 per cent said they would default if there were three more rate hikes.
Mr North said mortgage stress wasn’t just consigned to outer areas: there were pockets of stress among some more affluent households, especially those who took on massive mortgages to pay local prices.
Randwick, in Sydney’s east, recorded a mortgage stress rate of 100 per cent in the polling data.
MORE: Warning for Western Sydney home buyers
This home on Austral St, Mount Druitt, sold on April 28 for $915,000
This Waverley St, Randwick terrace recently sold for $2.615m
Across NSW, 51.1 per cent of mortgaged households, or about 568,000 households, were experiencing mortgage stress.
NSW was also the worst state in the country for rental stress (81 per cent), with suburbs like Camden (100 per cent), Mount Druitt (96.9 per cent) and Port Macquarie (95.1 per cent) among the toughest locations for renters.
“Costs of housing are rising much faster than incomes and especially in high-growth suburbs we are seeing real pressure on people, and rising costs of fuel will add more pressure ahead,” Mr North said.
“Renters have few choices but to pay up to stay or seek cheaper further out – but petrol costs rising makes that difficult.
“In each case, people cut back on spending, buy cheap goods, poorer quality food and cut back on medical and dental.”
MORE: How Boomers can help solve Australia’s housing crisis
Finder’s home loans expert Richard Whitten. Picture: Supplied
With the Reserve Bank’s next cash rate decision set to be released on May 5, Finder home loans expert Richard Whitten said another rate rise would definitely put more pressure on household budgets.
“Another rate rise of 25 basis points would take the cash rate back to its 2024 peak,” he said.
“In that time inflation has continued to rise, so this increase would put Australians in a worse position than they were before, especially when you consider how much petrol prices have increased.”
According to Mr Whitten, those struggling with mortgage repayments should take a harder look at their home loan, noting their monthly costs and current interest rate.
“If your interest rate is higher than what other lenders are offering, it’s worth comparing and refinancing to a better deal,” he said.
“Do this while you’re still making repayments on time, because if you start missing repayments, you’ll struggle to get a new loan approved.”
MORE: Aus suburbs where home reno costs are soaring
Ashley Reaiche recently bought an apartment in Sydney. Picture: Sam Ruttyn
MORE: Australia’s $85bn savings crisis exposed
Broke 39yo truckie paid off home in 10 years
‘$90 Bunnings gadget saved me from a $3m mistake’
Mortgage broker and Its Simple Finance founder Joseph Daoud said recent purchasers are calling to decrease, refinance or fix their rate, while new inquiries have been significantly reduced.
“People are truly in ‘wait and see’ territory,” he said.
Single mum of two and Its Simple Finance team member Ashley Reaiche recently purchased an apartment in Sydney.
Her mortgage will take approximately $1,000 per week from her current weekly budget, she said, and like most homeowners, she is concerned about further rate hikes.
“It’s an ongoing worry because no one wants to be paying more than they already are,” she said.
“The cost of simply keeping a roof over your head is becoming increasingly difficult for a lot of families.”
MORE: Aussies flee housing market for overseas bargains
MORE: Huge problem with Sydney’s new $3.5bn airport
HIGHEST MORTGAGE STRESS SUBURBS IN NSW
| Location | LGA | Mortgage Stress |
| Campbelltown | Campbelltown | 100.0% |
| Riverstone | The Hills Shire | 100.0% |
| Gundaroo | Queanbeyan-Palerang Regional | 100.0% |
| Mount Druitt | Blacktown | 100.0% |
| Dean Park | Blacktown | 100.0% |
| Bossley Park | Fairfield | 100.0% |
| Stanhope Gardens | Blacktown | 100.0% |
| Randwick | Randwick | 100.0% |
Source: Digital Finance Analytics
— With additional reporting by Kaylee Cranley
English (US) · 