New data reveals Tassie mortgage stress hotspots

Tens of thousands of Tasmanian households across the state’s most financially-strained suburbs are experiencing mortgage stress as the Reserve Bank considers another interest rate rise next Tuesday.

Research from Digital Finance Analytics shows households in Riverside, Warrane and Rosetta are feeling the pinch, with up to 6726 families in mortgage stress in these suburbs.

DFA founding principal Martin North found 34,203 households were suffering cash flow issues across Tasmania’s top 20 most-stressed suburbs.

Mr North said financial stress occurs when a household’s income is less than its outgoings.

“Cost pressures and bigger mortgages thanks to strongly rising home prices are putting more pressure on households, at a time when incomes are not rising in real terms,” he said.

MORE: Heating up: Hobart home prices reach record high

Ferry fast: Hobart suburb’s home sale surge

Dusseldorp and Winspear list stunningly rebuilt Federation home

Tax change to make Hobart a ‘nightmare for tenants’

Martin North. Picture: Hollie Adams

---

More than 46,000 Tasmanian homeowners are struggling with repayments, while 48,000 are in rental stress, Mr North said.

“After a period of price falls, prices are on the turn in Tasmania, though still depressed by low incomes,” he said.

“Affordability continues to fall due to strongly rising costs and weak income growth.

“Investors from interstate are active in the market, displacing some local first-time buyers.”

Warrane is among the suburbs worst hit my mortgage stress.

---

Derwent Finance director Rhianna Farnan said there is a distinction between cash flow pressure and defaults.

“What we’re seeing on the ground is that most people aren’t in immediate danger of losing their home, but they are feeling the squeeze week to week, which is often the earlier warning sign,” she said.

“In terms of where to start, speaking with a mortgage broker is a sensible first step. Not just to “chase a lower rate,” but to actually review the full structure of someone’s finances.

“In a lot of cases, there are simple adjustments such as refinancing, extending loan terms, or consolidating debts that can materially improve monthly cash flow without requiring drastic lifestyle changes.”

Derwent Finance director and COO Rhianna Farnan. Picture: Supplied

---

Ms Farnan said strategies include switching from monthly to fortnightly repayments, reviewing fixed rates taken during peak periods, using offset accounts more effectively, and temporarily moving to interest-only repayments.

“The common theme is that most people don’t actually need more income, they need a better structure,” she said.

April’s CPI release from the ABS showed annual inflation rose to 4.6 per cent from 3.7 per cent in March, with experts warning there is no reprieve in sight.

Three out of four experts in a Finder survey forecast the RBA will lift the cash rate.

Finder’s home loans expert Richard Whitten. Picture: Supplied

---

Richard Whitten, home loans expert at Finder, said another rate rise will be a bitter pill to swallow for households already reeling from rising costs.

“While default rates remain low, and the RBA likely believes borrowers can handle a slightly elevated rate, it’s hard to imagine rates going much higher without something breaking,” he said.

Mr North said an interest rate rise would hurt those already struggling.

“Rates will rise, and will directly lift mortgage stress,” he said.

“Investors will see their costs rise, and I expect rents to rise as a result.”