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Report shows mortgage pain spreads with COVID lockdowns


Queensland families are benefitting from fewer lockdowns and the control of COVID-19 with research showing a significant correlation between mortgage stress hot spots and COVID hot spots.

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The research from Digital Finance Analytics shows Queenslanders with a mortgage were  in far better shape than counterparts interstate with about 37 per cent in mortgage stress.

The lockdown in Sydney, now into its eighth week, has pushed mortgage stress in NSW to 40.1 per cent. Victoria, which is now into its sixth lockdown, is at 44.3 per cent.

While there factors other than COVID affecting mortgage stress, such as insecure work, the DFA report showed Fairfield and South Western Sydney were “the epicentre of COVID, and mortgage stress’’. 

“The reason is simple, more households there are in insecure work, often in multiple jobs with little fall-back, and massive spending pressures,’’ DFA said.

“Whilst young growing families – containing many first time buyers has the highest concentration of mortgage stress, at more than 78 per cent, our analysis shows that other households, including first generation migrants and more affluent households are also impacted.

“Indeed, this is also true of rental stress, and overall financial stress. It is a patchwork of pain.

“In terms of mortgage stress, the top postcodes are contained within the high-growth corridors, across Western Australia, Victoria, Queensland and NSW.’’

In Queensland, Toowoomba is worst affected. The report shows 59 per cent were in financial stress.

“More generally, mortgage stress rose across the country in July, thanks to the lock-downs, and also more mortgages being written at high loan-to-value ratio and debt-to-income ratios. Overall mortgage stress rose to 41.7 per cent, while household debt ratios also rose,’’ DFA said.

There was significant spike in NSW – at 40.15 per cent, compared with 38.62 per cent a month earlier. Tasmania has the highest proportion of households in mortgage stress.

The report said rental stress – again measured in cash flow terms was most predominant in Queensland in Surfers Paradise as wages remain stagnant and rents rise.

“We expect more pain ahead,’’ the report said.

Investor stress was also widespread, with central city locations hit hard, by limited migration and lock-downs. Vacancy rates were “very high’’ and some more affluent areas were also impacted.

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