Invest
Suburbia hit hardest by mortgage defaults
Suburbs up to 40 kilometres out of capital city centres have recorded the highest rates of mortgage delinquencies in Australia.
Suburbia hit hardest by mortgage defaults
Suburbs up to 40 kilometres out of capital city centres have recorded the highest rates of mortgage delinquencies in Australia.
Moody’s Investors Service’s latest RMBS Australia report found that across Australia’s capital cities, the share of mortgages that are at least 30 days in arrears averages 1.1 per cent in locations within five kilometres of central business districts (CBDs), compared with 1.9 per cent in suburbs 30 to 40 kilometres from CBDs.
“In the residential mortgage-backed securities (RMBS) we rate, delinquency rates are in many cases higher in deals with relatively large exposures to mortgages in outer areas,” Moody’s stated.
The ratings agency noted that “socioeconomic conditions are typically weaker in outer suburbs than in inner-city areas”.
However, Moody’s noted that while delinquency rates are highest in areas the furthest away from the CBD, suburbs within five kilometres of the CBD in most Australian capitals have higher arrears rates than suburbs within five and 10 kilometres of the CBD.
Moody’s attributed the disparity to the higher number of investment and interest-only loans among borrowers closest to the CBD.
“In Melbourne, Brisbane, Adelaide and Perth, arrears rates in suburbs closest to the city centre (within five kilometres) are slightly higher than those a little further out (five to 10 kilometres),” the report noted.
“[This] reflects the high share of mortgages on investment properties in areas closest to the city. For example, in suburbs within five kilometres of the Melbourne CBD, delinquent investment loans account for 57 per cent of all mortgage delinquencies.”
Moody’s added: “The high share of housing investment and interest-only loans in inner-city suburbs poses a risk in these areas. In suburbs within five kilometres of the CBD in Sydney, Melbourne and Brisbane, at least 50 per cent of mortgages are extended for investment purposes, [with] these areas also [having] a high share of interest-only loans.”
The ratings agency stated that while housing investment and interest-only loans “have generally performed well over recent years, given benign economic conditions and rising property prices”, the performance of such loans is “more sensitive” to a drop in property prices, adding that arrears are also likely to rise when interest-only terms expire.
“Falling housing prices can also hamper borrowers’ ability to refinance such loans or extend interest-only terms,” Moody’s continued.
However, Moody’s concluded: “In the event of a prolonged downturn in housing prices, mortgage delinquencies and defaults could increase in inner-city areas with a high share of investment and interest-only loans, though in general we expect delinquencies and defaults to remain higher in outer suburbs.
RELATED ARTICLES
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
Property
Multigenerational living is moving mainstream: how agents, developers and lenders can monetise the shift
Australia’s quiet housing revolution is no longer a niche lifestyle choice; it’s a structural shift in demand that will reward property businesses prepared to redesign product, pricing and ...Read more
Property
Prestige property, precision choice: a case study in selecting the right agent when millions are at stake
In Australia’s top-tier housing market, the wrong agent choice can quietly erase six figures from a sale. Privacy protocols, discreet buyer networks and data-savvy marketing have become the new ...Read more
Property
From ‘ugly’ to alpha: Turning outdated Australian homes into high‑yield assets
In a tight listings market, outdated properties aren’t dead weight—they’re mispriced optionality. Agencies and vendors that industrialise light‑touch refurbishment, behavioural marketing and ...Read more
Property
The 2026 Investor Playbook: Rental Tailwinds, City Divergence and the Tech-Led Operations Advantage
Rental income looks set to do the heavy lifting for investors in 2026, but not every capital city will move in lockstep. Industry veteran John McGrath tips a stronger rental year and a Melbourne ...Read more
Property
Prestige property, precision choice: Data, discretion and regulation now decide million‑dollar outcomes
In Australia’s prestige housing market, the selling agent is no longer a mere intermediary but a strategic supplier whose choices can shift outcomes by seven figures. The differentiators are no longer ...Read more
Property
The new battleground in housing: how first-home buyer policy is reshaping Australia’s entry-level market
Government-backed guarantees and stamp duty concessions have pushed fresh demand into the bottom of Australia’s price ladder, lifting values and compressing selling times in entry-level segmentsRead more
Property
Property 2026: Why measured moves will beat the market
In 2026, Australian property success will be won by investors who privilege resilience over velocity. The market is fragmenting by suburb and asset type, financing conditions remain tight, and ...Read more
Property
Entry-level property is winning: How first home buyer programs are reshaping demand, pricing power and strategy
Lower-priced homes are appreciating faster as government support channels demand into the entry tier. For developers, lenders and marketers, this is not a blip—it’s a structural reweighting of demand ...Read more
