A community legal centre fears hundreds of local residents are on the brink of mortgage stress.
About 130 clients have reached out to a mortgage wellbeing service set up by Community West’s Brimbank Melton Community Legal Centre and Djerriwarrh Health Service almost a year ago.
Ursula Noye, a managing lawyer for the program, fears there will be many more if interest rates increase.
Her comments come as new data shows mortgage stress in Burnside is among the worst in Australia. Moody’s Investor Service’s latest Australian residential delinquency map reveals Burnside is among the nation’s 20 hardest-hit postcodes, with a mortgage delinquency rate of 3.33 per cent at November last year, up 0.77 per cent in 12 months.
Ms Noye said Melbourne’s west, with substantial urban growth, consistently rated as one of the worst areas of mortgage stress in the country.
“In the context of shifting working life norms, static lending practices and temporarily low interest rates, lower income earners are particularly vulnerable to mortgage stress,” she said.
“We are in a bit of a bubble because interest rates are quite low so if they jump it will throw a lot more people into mortgage stress.”
Ms Noye said the latest Moody’s data confirmed the need for the mortgage wellbeing service, which provides free legal, social and financial counselling to people undergoing mortgage stress.
She said the centre hopes to make the two-year pilot program permanent.
The Moody’s report shows postcodes in Queensland and Western Australia accounted for 13 of the 20 worst repayment-default suburbs in the country.
Another three are in Victoria, with Craigieburn and Carrum Downs joining Burnside on the ‘black list’.
Moody’s assistant vice-president Alena Chen said the company expected weaker housing, economic and labour market conditions to continue to weigh on mortgage delinquency performance in all states aside from New South Wales, where delinquency rates have declined significantly to reach their lowest level since 2005.
“We expect the Australia-wide delinquency rate for mortgages showing more than 30 days in arrears to increase in 2016 but remain at a low level,” Ms Chen said.
