Rising mortgage payments and interest rates affect different parts of Australia

As the RBA turns the screw on Australia, hoping to suppress buying activity and thereby reduce inflation, mortgage repayments are rising. Borrowers are the pedal on which the foot of monetary policy bounces in its rhythm, up and down and back.

Are households with mortgages suffering? Two-thirds are at least a little ahead of their repayments. Others are having difficult conversations about what to do as mortgage payments rise: if they need to work more, maybe work weekends instead of spending time with family – or reduce expensive shopping.

Different families face different choices. Mortgage-holder households are important not only because there are so many of them, but also because so many of them have children. As the monetary policy machine forces households to tighten their belts, the children are in a hurry. As the following graph shows, $3 billion was paid monthly by mortgagee households with children under 15 at the time of the census in 2021. Far more than $3 billion will flow from households to banks now official cash rates rose from 0.1% to 1.35%.

(Image: 2021 Census/Murphy)

The table above shows that some people have large mortgages. There is a group of people who pay five thousand dollars a month or more and many more who pay over $2,500 a month.

Who are these people? I mapped mortgage payments by suburb for Australian cities and the answer seems to be that big mortgages don’t correspond to wealthier suburbs. But they are found in the neighboring suburbs. The maps below use color coding to show which parts of the city have the highest mortgages. Labels are applied to suburbs at the top and bottom of the reimbursement spectrum.

The highest mortgage repayments in the country are in the ACT and Sydney, the maps reveal, and the lowest are in North Adelaide.

But of course, a high mortgage doesn’t matter if you have a high income. Where are mortgages highest as a percentage of local income? The following maps show that these are not always the same areas where mortgage repayments are the highest.

The Sydney map is instructive – in Cabramatta household mortgage repayments are towards the high end of local personal income, while in Balmain repayments are low relative to local personal income.

(Note that this is a indirect measure of mortgage stress. Households with mortgages in a region contain a subset of those with measured incomes and may have different characteristics – younger than average in regions that tend to be older; older than average in areas that tend to be younger; wealthier than average in diverse neighborhoods rich in social housing; more likely to have multiple household incomes, etc. Percentages don’t tell you how much of their income a family spends on their mortgage. Think of it as an indicator of the likelihood of mortgage stress for people in that region.)

Yet the trend is also consistent in Melbourne: the affluent city of Brighton has one of the lowest shares of mortgage repayments to local income, while Broadmeadows (combat territory) is at the other end of the spectrum. ladder.

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