New PEXA research has found nearly half of New South Wales’ postcodes are forecast to face high mortgage risk by next month, as households face increasing pressure on their home loan repayments. 

The research showed that 181 postcodes in NSW, or 46%, were forecast to face high mortgage risk in May 2023. 

The research also found that 22% of postcodes in Victoria (74) were forecast for high mortgage risk, while about 9% of postcodes in Queensland (19) faced the same pressure.  

“With interest rates continuing to rise and the cost of living also squeezing the budgets of households, there has been a pronounced spike in the number of families facing more immediate mortgage risk,” PEXA’s Head of Research, Mike Gill, said. 

“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.” 

In NSW, the majority of the very high-risk postcodes were located in greater Sydney, led by Northbridge (2063), Dural (2158) and Avalon Beach (2107). 

The trend was also replicated in Victoria, which saw Balwyn (3103), Balwyn North (3104) and Canterbury (3126) top the mortgage risk charts. 

Notably, this pattern was not seen in Queensland, where regional postcodes were more prominently recorded as being at high-risk – namely Noosaville (4566), Maleny (4552) and Tallebudgera (4228). 

The income distributions of high-risk postcodes in New South Wales and Victoria were similar and encompassed both high- and low-income areas. Almost 40% were from the very high-income postcodes, with around a quarter from low-income group. 

In contrast, Queensland’s higher risk postcodes skewed towards lower income areas, where 37% were low-income postcodes and only 11% were very high-income postcodes.  

Further illustrating the lending pain being experienced, in NSW, borrowers will require an extra $15,985 per year on average to meet their loan repayments, an increase of 62.3% from December 2020. 

Victorian homeowners will have to front up an additional $13,327 (up 67.3%) and Queenslanders will be hit to the tune of $11,567 (a 67.0% rise). 

And while it is generally expected that families in higher income postcodes may be more insulated against potential mortgage risk, primarily through the likelihood of deeper savings, the size of their loans cannot be understated. 

Repayments for those in Northbridge (2063) and Canterbury (3126) were projected to rise by more than $60,000 annually – sizeable sums irrespective of your financial security. 

The research explored the impact of the current economic climate, namely continued 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. 

As part of this study, “Mortgage Risk” was defined as how difficult it is for families within a given postcode to meet their home loan repayments, using the ABS definition of a family – two or more persons, one of whom is at least 15 years of age, who are related by blood, marriage (registered or de facto), adoption, step or fostering, and who are usually residents in the same household. 

It was calculated by assessing the median monthly home loan repayments as a proportion of the median monthly family income for each postcode, before being categorised into low (0-20%), moderate (>20-40%), high (>40-60%) or very high (>60%) risk. 

The report found those families in higher risk postcodes were being forced to dedicate a higher percentage of their income to meet their repayments – with families across both high- and low-income areas alike being affected.