When Geelong can expect relief from mortgage pain

Mortgage pain hasn’t peaked yet for many Geelong homeowners despite three cuts to interest rates this year.

A new report names Geelong among the nation’s 10 worst regions for mortgage arrears in 2025, showing close to one-in-50 borrowers were more than 30 days behind on their repayments.

The S&P Global report showed Melbourne’s south east and north west and the Gippsland-Latrobe region had worse mortgage arrears than Geelong.

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S&P Global director Erin Kitson said for much of Australia the peak of the mortgage pain was now behind them, and that as the number of those struggling with their mortgages declined lenders would become more generous, potentially having flow on effects to home prices.

“You will see arrears continuing to gradually come down. But what will be interesting on the lending front will be what happens to mortgage competition and refinancing levels.”

The finance specialist said that as interest rates dropped, lenders traditionally became more competitive – and were likely to be made more confident in this regard as home values rose, giving those who had fallen into arrears more options both to sell or to refinance.

“So I think there will be fewer mortgagee in possession sales,” Ms Kitson added.

Ms Kitson said this arrears cycle had been shielded from becoming worse by a combination of rising prices in many parts of the nation, a 3 per cent mortgage buffer set for lenders nationwide, Australians’ general preference to prioritise their mortgage and unemployment remaining low.

New figures show up to 1 in 50 people are more than 30 days behind in their mortgage payments in Geelong.

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However, poorer performing prices in areas such as Geelong could lead to a slower recovery from mortgage pain — as those who couldn’t cope with repayments were less likely to be able to sell before they wound up in arrears.

“If you have equity, that enables you to voluntarily sell and get out of your position,” Ms Kitson said.

Geelong mortgage broker, GSE Finance partner Matt Turner said people struggling were looking for ways to avoid falling behind on their home loans.

“We’ve actually been reasonably proactive with our client base prior to the rate cuts and even since just to check in, see how everything’s going and put plans in place to help people through a tough time,” he said.

“I get a sense that there’s definitely pockets of Geelong where values have decreased more than others and that has created some challenges in terms of being able to refinance or even sell the property as a result.

The five-bedroom property at 23 Wilkins Close, Corio, is listed for sale with $570,000 price hopes after the mortgagee took possession. Offers close on September 16. The property previously sold in 2020.

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“One thing that we have done a lot of – that we don’t generally recommend for clients – is increasing their loan terms to reduce repayments and minimise the cost while repayments were high.”

Mr Turner said some people found they were unable to refinance despite meeting repayments on higher interest rate loans as home prices fell.

“The way the interest rate buffer works and lender policies meant that some clients fell into that mortgage prisoner situation, whereas if they had been able to refinance to a lower rate and definitely a better product, it might have actually meant that they’re able to keep up for a bit longer as well.”

Mr Turner said the small rate drops meant many people were not feeling the pinch as they were.

“The good news is most were able to adjust their budgets around their mortgage repayments and as a result have kept their payments to a higher minimum as well,” Mr Turner said.

Ray White Lara agent Peter Norman, who is handling the current sale of a Corio home that’s in possession of the mortgagee, said most distressed sales he’s handled in the suburb in previous were owners selling up before the bank repossessed their property because they were behind on their mortgage.