Two suburbs on Melbourne’s fringes are among the worst postcodes in the country for mortgage delinquency, new data shows.
Craigieburn and Burnside sit alongside postcodes in Queensland and Western Australia — the two states hardest hit by Australia’s resource sector slowdown — on Moody’s Investors Service Australia Residential Mortgage Delinquency Map.
The report comes as data released last week showed the number of people living on Melbourne’s fringe continues to explode at a rapid rate, with experts concerned the state government is not doing enough to monitor the population boom.
But while mortgage defaults in the two growth corridor suburbs have increased in the past 12 months, Victoria’s statewide picture is rosier, suggesting most Melburnians are keeping in step with their home loan payments.
Mortgage delinquency in Victoria rose by just 0.01 per cent from November 2014 to November 2015, with rates actually dropping the inner regions and generally rising only marginally in the north of Melbourne, outer east and south east.
The story in Craigieburn and Burnside, next to Caroline Springs in the west, is a blackspot on the state’s credit report, with delinquency rates rising 0.77 per cent and 0.76 per cent respectively over the 12 months to be among the highest in Australia.
The rates were high enough to list the suburbs alongside highly financially stressed postcodes in outback Queensland, Brisbane and Perth; areas which have been highly reliant on mining and resource sectors and have been badly affected by unemployment in the aftermath of the mining boom.
Brotherhood of St Laurence senior advisor Pat O’Neill said Melbourne’s growth corridors were also highly exposed to industries vulnerable to the economic cycle.
“Often people living on the fringe are much more vulnerable in terms of employment opportunities, with more people with part time and causalised employment,” said Mr O’Neill, whose organisation has switched its focus to growth corridors in recent years.
“The picture is that they are living perilously close to the edge and just weeks away from potential disaster.”
He said census data showed those living in areas such as Craigieburn and Burnside were generally highly geared young families, who spent a higher proportion of their income on mortgages and rent, and who would therefore be more susceptible to economic issues, including rising interest rates.
“It gives you a higher level of vulnerability because anything can tip you over the edge,” he said.
Casey O’Brien, manager of financial inclusion and community development Lentara UnitingCare — the lead agency for financial counselling in the Hume area — said Craigieburn and the entire Hume region had struggled with mortgage stress for some time.
Mr O’Brien said the impact had been felt by the closing of the Broadmeadows Ford car manufacturing plant, the number of people in casual jobs and the overcommitment to mortgages in a low interest rate environment.
“There’s people who haven’t made allowances for a change in circumstances,” he said.
He advised anyone experiencing financial stress to address the issue as soon as they identify they are struggling. “It’s quite natural for people to try manage through the stress, but there are organisations willing and able to help.”
Meanwhile, a survey by MLC this week showed the level of anxiety surrounding mortgage repayments may be a little more widespread.
One in five of the 2000 Australians surveyed believed they would have to rely on family inheritance to pay off their mortgages and half said they would not be able to maintain their own lifestyle in 10 years’ time.