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Mortgage stress on the rise across Australia, with Tasmania hit hardest

Meanwhile, some crossbench senators say they won't support the government's plan to axe safe lending laws.

young_woman_in_finacial_mortgage_stress
Last updated: 27 May 2021

Need to know

  • More than half of Tasmanian households with home loans are at breaking point
  • Salisbury in SA, Toowoomba in Queensland, Western Sydney and Western Melbourne are other mortgage stress hotspots
  • The government has vowed to push on with plans to axe safe lending laws, despite lack of support from some Senate crossbenchers

New data released by CHOICE has revealed the top suburbs in mortgage stress across Australia, as the government vows to push ahead with its axing of safe lending laws that protect consumers.

Data from Digital Financial Analytics analysed for CHOICE found Tasmania to be the state hardest hit by the mortgage crisis.

More than 55% of households with a mortgage in Tasmania are deemed to be in mortgage stress. Launceston leads the list with more than 4700 households on the brink.

Lenders routinely broke safe lending laws and trapped people into unaffordable loans

CHOICE banking policy expert Patrick Veyret

"Tasmania was once one of the most affordable places in the country to live and now communities like Launceston are living on the brink," says CHOICE banking policy expert Patrick Veyret.

"The Banking Royal Commission was clear: lenders routinely broke safe lending laws and trapped people into unaffordable loans. Commissioner Hayne recommended that safe lending laws be enforced, not dismantled.

"Safe lending laws are an essential consumer protection to ensure that banks don't load people up with excessive debt," says Veyret.

Government presses on with plans to axe safe lending laws

This new data comes as the federal government struggles to gain enough support in the Senate to axe safe lending laws, with more crossbench Senators announcing they will not support the government's policy.

Last week Senator Pauline Hanson announced that she and her One Nation colleague would not be supporting the government's legislation.

Tasmanian Senator Jacqui Lambie has signalled that she's against the bill, and South Australian Senator Rex Patrick has said he is unlikely to support it.

But Treasurer Josh Frydenberg has vowed to push ahead with the bill, still hoping to get a deal in the Senate despite growing opposition to it.

Pinch felt across the nation

Meanwhile, the top South Australian postcode in mortgage stress takes in the suburbs surrounding Salisbury in Adelaide's north, with more than 5700 households feeling the heat.

Toowoomba and surrounding suburbs topped the list for Queensland, with more than 9600 households in mortgage stress.

Nationally, Western Sydney and Western Melbourne were both found to be the national hotspots for mortgage stress. The 10 crisis suburbs for New South Wales and Victoria represent over 130,000 households on the brink.

"These are households where from fortnight to fortnight, people are spending more than they are earning. That means that they have to make difficult choices, like whether to put food on the table or keep up with repayments. If they can't maintain the juggling act, they risk losing their homes." says CHOICE CEO Alan Kirkland.

They have to make difficult choices, like whether to put food on the table or keep up with repayments

CHOICE CEO Alan Kirkland

"Safe lending laws were put in place to avoid the huge damage to families and communities caused by mortgage stress – by making banks take care to avoid giving people loans they won't be able to afford to repay."

"If the government gets away with its plan to axe safe lending laws people who are desperate to get into a rising housing market will be at risk of overexposure and people who need to refinance won't be adequately protected," says Kirkland.

"We call upon the government to ditch its irresponsible plan. Now is not the time to give more power to the banks," he adds.

More than 39,000 Australians and 125 organisations have signed our open letter calling on parliamentarians to save safe lending. Add your name at choice.com.au/safelending.

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