Worst suburbs for mortgage arrears revealed: Will rate cuts come quick enough?
Sophie Foster, Property Journalist
First published 11 March 2025, 12:00 PM
The top ten worst performing postcodes were in three states, with the latest S&P Global Ratings market report warning one in particular is dominating amid major upheaval to its housing market and recent price falls.
It expected “interest rate cuts will ease debt serviceability pressures” for many struggling homeowners, but they won’t come fast enough to some.
“We believe they won’t make a material difference to arrears levels because they’re likely to be gradual,” the S&P Global Ratings report said.
Victoria dominated the top ten worst performing postcodes list, making up half the list with five postcodes with around 25 suburbs, New South Wales was close behind with four postcodes containing 50, and Queensland had one postcode with about a dozen.
“The state of Victoria has the nation’s highest arrears and highest unemployment levels,” S&P Global Ratings found.
Victoria
Around 1.8% of prime home loans in Victoria were in arrears, with its five worst postcodes showing significantly worse results.
Postcode |
Percentage in arrears |
Suburbs |
| 3064 | 3.1% | Craigieburn, Donnybrook, Kalkallo, Michkleham, Roxburgh Park |
| 3023 | 2.81% | Burnside, Burnside Heights, Cairnlea, Caroline Springs, Deer Park, Deer Park North, Ravenhall |
| 3805 | 2.59% | Fountain Gate, Narre Warren, Narre Warren South |
| 3810 | 2.11% | Pakenham, Pakenham South, Pakenham Upper, Rythdale |
| 3338 | 2.07% | Brookfield, Cobblebank, Exford, Eynesbury, Melton South, Strathtulloh, Weir Views |
New South Wales
NSW had four postcodes make the worst performers list and has the second highest overall prime loans result in the country with 0.93% in arrears.
Postcode |
Percentage in arrears |
Suburbs |
| 2261 | 2.78% | Bateau Bay, Bay Village Berkeley Vale, Blue Bay, Chittaway Bay, Chittaway Point, Glenning Valley, Killarney Vale, Long Jetty, Magenta, Shelly Beach, The Entrance, The Entrance North, Toowoon Bay, Tumbi Umbi |
| 2170 | 2.44% | Casula, Chipping Norton, Hammondville, Liverpool, Liverpool South, Lurnea, Moorebank, Mount Pritchard, Prestons, Warwick Farm |
| 2148 | 2.02% | Arndell Park, Blacktown, Huntingwood, Kings Park, Maryong, Prospect |
| 2560 | 1.94% | Airds, Ambarvale, Appin, Blair Athol, Bradbury, Campbelltown, Campbelltown North, Cataract, Englorie Park, Gilead, Glen Aplie, Kentlyn, Leumeah, Macarthur Square, Rosemeadow, Ruse, St Helens Park, Wedderburn, Woodbine |
Percentage-wise Northern Territory (0.91%), Western Australia 0.80% and Australian Capital Territory 0.66% were all showing the next highest levels of mortgage arrears overall.
Queensland and South Australia were tied on 0.65% followed by Tasmania’s 0.6%, but the Sunshine State had only one postcode in the top ten worst performers’ list – 4211 which has 2.2% of prime home loans in arrears covering places like Advancetown, Carrara, and Nerang on the Gold Coast.
Queensland
Postcode |
Percentage in arrears |
Suburbs |
| 4211 | 2.2% | Advancetown, Beechmont, Binna Burra, Carrara, Clagiraba, Gaven, Gilston, Highland Park, Lower Beechmont, Mount Nathan, Natural Bridge, Nerang, Numinbah Valley, Pacific Pins, Southern Lamington |
“The largest year-on-year declines in arrears were recorded in Western Australia, Northern Territory, and Queensland,” S&P Global Ratings found.
“Arrears are higher in postcodes on the fringes of more populous capital cities, where debt-to-income ratios are typically more stretched”.
Australia’s overall level of arrears (0.87% for prime loans) was quite modest thanks to low unemployment, refinancing opportunities, savings buffers, and property price dynamics that give struggling homeowners an early out - though the report does warn it was yet to peak.
“While we expect unemployment to rise, it will likely remain below prepandemic levels. Property price growth also gives existing homeowners greater agency in self-managing their way out of financial stress.”
'How interest rate cuts affect the property market': youtube.com/mortgagechoice
“Ongoing cost-of-living pressures and depleted household savings will add further strains on household budgets for a small proportion of borrowers who are more highly leveraged. For these borrowers, lower interest rates and property price growth will ease debt serviceability pressures and help to curtail potential losses.”
One of the new areas of concern at present was the vast south east Queensland region – home to around 3.8 million people and 1.88m properties – impacted by fallout from cyclone Alfred.
“Flooding in more densely populated cities like Brisbane, could have an impact on arrears levels, particularly in transactions with higher exposure to Queensland and affected areas,” the report warned.
This article first appeared on realestate.com.au and has been republished with permission.
