Australia's hotspots for mortgage failure: See the areas facing a foreclosure epidemic when home loan payments resume after coronavirus pause
- Digital Finance Analytics estimates 40.1 per cent of home borrowers in stress
- Levels have risen significantly since February as result of coronavirus pandemic
- Outer suburbs of Sydney, Melbourne had 80 per cent of loans in dire straits
- Wealthy areas of Sydney's north shore and eastern suburbs also in the red zone
- Melbourne home to seven of Australia's ten worst areas for mortgage stress
Australia's worst postcodes for mortgage stress have been revealed amid fears that the first recession in three decades will trigger a wave of foreclosures.
Digital Finance Analytics calculated that more than 80 per cent of borrowers were struggling to pay their bills in parts of Melbourne, Sydney, Brisbane, Perth, Hobart and some regional areas, as coronavirus lockdowns crippled the economy.
The national average of people who lacked sufficient funds to pay their bills had surged to 40 per cent, up from 33 per cent in February before the COVID-19 pandemic was declared.
Six-month mortgage repayment holidays had shielded some struggling mortgage holders from the full effects of the lockdown but the banks are now asking for their money and pressuring borrowers to sell if they can't pay up.
Australia's worst postcodes for mortgage stress have been revealed amid fears the first recession in three decades will worsen an already dangerous situation. Digital Finance Analytics calculated that in parts of south-east and northern Melbourne, more than 85 per cent of borrowers are in mortgage stress
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Young families were in particular danger last month with 73.1 per cent of them in dire straits compared with 66.4 per cent for battlers living in the urban fringes of Australia's major cities.
Digital Finance Analytics principal Martin North, an economist, said the problem in outer-suburban areas was set to worsen in March 2021 as extended mortgage repayment reprieves ended, in tandem with unemployment rising.
'This is a social disaster not just a financial disaster,' he told Daily Mail Australia.
'It translates into things like violence and drugs.
'Some of these people have some of the lowest savings and therefore are only a month away from not being able to pay for all of the bills.
'This is the foothills of the problem not the pinnacle of the problem.'
Victoria's strict Stage 4 lockdowns are exacerbating mortgage stress, with Melbourne home to seven of Australia's ten worst areas for financial woes.
In the worst-affected areas of Australia, more than 89 per cent of borrowers can't pay their bills - with Pascoe Vale, Narre Warren, Belgrave, Armadale and Essendon topping the list.
At Rowville in Melbourne's outer south-east, 84 per cent of home borrowers were in stress in August.
Epping in the city's north had 78 per cent of borrowers in stress.
In western Sydney, 82 per cent of borrowers were struggling at Lethbridge Park, Minchinbury and Mount Druitt.
Sydney's south-west was also in bad shape with 74 per cent of mortgage holders in duress in Abbotsbury, Bossley Park and Edensor Park.
In western Sydney, 82 per cent of borrowers were struggling at Lethbridge Park, Minchinbury and Mount Druitt. Sydney's south-west was also in bad shape with 74 per cent of mortgage holders in duress in Abbotsbury, Bossley Park and Edensor Park
Mr North said these outer-suburban areas with new houses had a higher proportion of migrants.
'A lot of people, often migrants, coming in and buying those properties - the McMansions on small lots,' he said.
'Big mortgages are reliant on multiple incomes and unfortunately, it's all going a bit wrong now.'
The problem, however, wasn't confined to poorer areas with mortgage stress red zones including Roseville and Castle Cove on Sydney's north shore and Rose Bay in the eastern suburbs.
Australia's biggest cities weren't the only areas in trouble, with 76 per cent of borrowers struggling at Clarkson, Merriwa and Mindarie in Perth's north.
Three-quarters of borrowers were also in dire straits in the northern Brisbane suburbs of Carseldine, Geebung and Zillmere
Australia's biggest cities weren't the only areas in trouble, with 76 per cent of borrowers struggling at Clarkson, Merriwa and Mindarie in Perth's north
Three-quarters of borrowers were also in dire straits in the northern Brisbane suburbs of Carseldine, Geebung and Zillmere.
Ballarat in western Victoria has a 76 per cent distress rate and the highest number of struggling borrowers at 7,462.
The Reserve Bank of Australia last month said a 40 per cent fall in house prices was plausible as unemployment hit double-digit figures for the first time since 1994.
Mr North said this occurred several years after the Global Financial Crisis in the US and the UK and was likely to happen in Australia, with the economy officially in recession for the first time in 29 years.
At a state level, Tasmania was in particularly bad shape, with 48.8 per cent of borrowers in mortgage stress, as the island state keeps its border closed.
Digital Finance Analytics calculated that as many as 40 per cent of Australia's home loan holders were struggling to pay their bills in August 2020 as the coronavirus lockdowns crippled the economy. Pictured is Melbourne's Bourke Street mall during the Stage 4 lockdowns
The northern Hobart suburbs of Grasstree Hill and Honeywood were among some of Australia's worst areas for mortgage stress.
In Victoria, 44.2 per cent of mortgagors were struggling amid the strict Stage 4 coronavirus lockdowns with 437,191 distressed mortgages.
That put it ahead of Western Australia (43.2 per cent), the Australian Capital Territory (41.3 per cent), New South Wales (37.6 per cent), South Australia (37.5 per cent), Queensland (36.4 per cent) and the Northern Territory (30.2 per cent).
Digital Finance Analytics data is based on monthly telephone and Zoom focus group surveys of 4,700 people across Australia.
In February, before the COVID-19 pandemic was declared, 33 per cent of home borrowers lacked sufficient funds in the bank to meet their expenses. Pictuerd is a house for sale at Kellyville in Sydney's north west
