Thousands of Australian homeowners are struggling to make their repayments, with Tasmania, Sydney and Perth all feeling the heat

  • More than half of mortgaged Tasmanian households experience mortgage stress, making it the state most prone to financial hardship linked to home loans.
  • Some 55% of mortgage holders face stress, where 30% or more of household income goes towards repayments, CHOICE says.
  • Counting Victoria and New South Wales alone, some 130,000 households fall into that category.
  • Visit Business Insider Australia’s homepage for more stories.

More than half of Tasmanian homeowners now face mortgage stress, according to consumer advocacy group CHOICE. It ranks the Apple Isle as the Australian state most susceptible to financial hardship linked to home loan repayments.

Citing April figures from Digital Finance Analytics, CHOICE states 55% of Tasmanian mortgage holders face stress, commonly defined as the point where 30% or more of household earnings go towards home loan repayments.

Launceston and its surrounding regions are the hardest-hit, with some 4,735 homes now considered stressed.

The east Hobart suburbs of Bellerive, Howrah, Montagu Bay, Mornington, Rosny, Rosny Park, Tranmere, and Warrane are collectively home to 3,123 such households.

Earlier this week, CHOICE revealed suburbs in Western Sydney, west and south-east Melbourne, and north Perth were national hotspots for mortgage stress. Counting Victoria and New South Wales alone, more than 130,000 households are currently feeling the pinch.

The findings come as consumer advocacy groups battle the Morrison government’s plan to overturn responsible lending laws, which critics say would allow financial institutions to offer mortgages and other loans to people who may be unable to pay them back.

Those laws, introduced in 2009 in the wake of the Global Financial Crisis (GFC), were designed to ensure lenders thoroughly analysed the finances of potential borrowers before signing off on loans, including mortgages.

The Morrison government last year pushed to remove those laws, with Treasurer Josh Frydenberg saying more efficient access to credit would stimulate Australia’s economic recovery after the deep coronavirus lockdowns of 2020.

That effort has received strident opposition from consumer advocacy groups including CHOICE, whose CEO Alan Kirkland told a February Senate committee hearing that abolishing those rules — and putting the burden of responsibility back on the borrower — would have drastic adverse impacts.

“We call upon the Government to ditch its irresponsible plan,” Kirkland said in a statement. “Now is not the time to give more power to the banks.”

The effort to overturn the rules has received parliamentary opposition from Labor, the Greens, and, more recently, One Nation, whose leader Senator Pauline Hanson this month said “millions of Australians should not be left vulnerable to predatory banking conduct.”

The battle over responsible lending laws comes at an inflection point for the Australian housing market after a year of uncertainty.

Despite fears of a debt ‘cliff’ after government-mandated mortgage deferrals came to an end, Australia’s largest banks say no tidal wave of bankruptcies came to pass.

Meanwhile, borrowers signed on for a record value of new home loans in March — with responsible lending laws still in place.

Auction clearance rates and house prices remain elevated, leading critics to fear even more mortgage stress is coming if responsible lending rules are dissolved.

“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,” Kirkland said.