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Where rapid rate hikes will hurt the most

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December’s latest cash rate hike is now the Reserve Bank’s sharpest interest rate hike to date, hitting some Australians particularly hard.

Eight consecutive months of interest rate hikes have led to a significant increase in mortgage repayments, Slowdown in new lending.

A nationwide look at the regions with the highest percentage of households paying off their mortgages provides insight into who is most affected and who is most at risk. mortgage stress.

Mortgage belts tend to be in the suburbs towards the edge of the city and are populated by young families.Photo: Getty


A ‘mortgage belt’ around the most at-risk cities

The highest proportion of households with mortgages is located in peri-urban areas.

These areas are generally more than 10 km from the city center and have many new developments, mostly occupied by young families.

Across the country, 35% of households have paid off their mortgages. In these so-called “mortgage belts” it can be half or more of a household.

People living in these areas tend to be younger than the national median age of 38, but generally have a higher household income than the typical household earning about $1,700 a week.

A typical mortgage repayment in a mortgage-rich area is about $2000 a month, but it’s worth noting that repayments have increased 25% since this census data was collected. .

These mortgage areas will feel higher interest rates than others.

In the map below, you can see the percentage of households with mortgage debt across the country.

Some households are unaffected by rate hikes

In some parts of the country, the percentage of homeowners is higher than the percentage of people with mortgages.

This is surprisingly common. About 47% of homeowners nationwide do not have a mortgage. Almost half of the SA3 region[1] There are more households without mortgages than those with mortgages.

The proportion of homeowners without a mortgage is highest in rural areas of the country.

In some areas, about two-thirds of homeowners do not have a mortgage. These areas also tend to have a lower percentage of renters, often around 20%.

It is natural that there are many retirees in areas with many debt-free households.

The average household size is small, usually two. Median household income is also low, below the national average of about $1,700 a week.

While this may represent the ideal retirement for many Australians, rising house prices mean fewer households are able to pay off their mortgages before retirement.

This has led to more households taking out mortgages after retirement, and this trend is likely to continue.

On the map below, you can find out the percentage of debt-free homeowners across the country.

Hopefully it doesn’t get any worse for those in the mortgage belt as rate hikes tend to end in early 2023.

However, mortgage repayments will continue to rise for some time, putting continued pressure on mortgagor’s budgets and reducing the purchasing power of would-be buyers.

But those living without a mortgage will appreciate their luck.


[1] The SA3 region is defined by the Australian Bureau of Statistics and generally has between 30,000 and 130,000 people. In cities they often correspond to local government areas.

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