From Tarneit and Craigieburn to Narre Warren and Pakenham, the communities where many young families and new Australians have built their lives are also recording some of the country’s highest mortgage arrears. Three interest-rate rises this year have added to the pressure.
The suburbs that have come to represent modern migrant Australia are also emerging as the centre of the nation’s mortgage squeeze.
Tarneit, Point Cook, Craigieburn, Narre Warren South and other fast-growing communities across Melbourne’s outer west, north and south-east repeatedly appear in data measuring mortgage arrears, financial hardship and household vulnerability.
A research brief compiled for The Indian Sun, drawing on figures from the Australian Securities and Investments Commission, the Reserve Bank, the Australian Prudential Regulation Authority, the Australian Financial Security Authority, ratings agencies and community organisations, places Victoria at or near the top of several measures of home-loan distress.
The pressure is not evenly spread. It is concentrated in growth corridors where many young families and first home buyers purchased relatively recently, often with large mortgages and limited financial buffers.
Victoria was already leading the country in requests for mortgage hardship assistance before this year’s rate rises. ASIC’s latest comparable state data recorded 134,204 hardship notices in the 18 months to June 2025, ahead of New South Wales on 122,561.
Nationally, the number of hardship notices increased by 58 per cent over that period.
One of the more revealing findings concerned the reasons borrowers sought help. Overcommitment was the largest reported cause, ahead of reduced income.
That suggests many borrowers had not necessarily lost their jobs or suffered a sudden collapse in earnings. Instead, they had taken on loans that became increasingly difficult to carry once interest rates, insurance, council rates, food, childcare and other household costs rose.
The pressure has since intensified.
The Reserve Bank raised the cash rate in February, March and May, returning it to 4.35 per cent as inflation remained elevated. Much of the official data showing mortgage arrears stabilising around pre-pandemic levels was collected before the full effect of those increases reached household budgets.
More recent private estimates point to renewed deterioration. Roy Morgan’s May measure placed 29 per cent of Australian mortgage holders, representing about 1.54 million households, at risk of mortgage stress after four consecutive monthly increases
More recent private estimates point to renewed deterioration. Roy Morgan’s May measure placed 29 per cent of Australian mortgage holders, representing about 1.54 million households, at risk of mortgage stress after four consecutive monthly increases.
Victoria entered the year as the second-worst state on the measure, with 27.2 per cent of mortgage holders classified as at risk. Roy Morgan projected the figure could move towards 30 per cent as higher repayments flowed through.
The figures measure different things and should not be treated as interchangeable. Mortgage stress estimates are generally based on household income and expenditure, while arrears data records borrowers who have already fallen behind.
Together, however, they suggest a widening gap between households struggling to balance their budgets and the smaller number who have reached formal default.
The corridor postcodes
The geography is consistent across several independent datasets.
S&P Global Ratings figures reported late last year placed Craigieburn’s 3064 postcode at the top of Australia’s mortgage arrears table, with about 3 per cent of loans behind on repayments. That equates to roughly one in every 33 mortgages.
Melbourne postcodes have accounted for six of the country’s 10 worst arrears locations for about 18 months. Areas appearing in those rankings have included Pakenham, Hoppers Crossing, Werribee, Melton South, Point Cook, Cranbourne and Frankston.
In Melbourne’s south-east, postcode 3805, covering Narre Warren, Narre Warren South and Fountain Gate, recorded the city’s highest prime mortgage arrears rate in mid-2025 at 2.79 per cent.
These are among Australia’s most culturally diverse communities.
At the 2021 Census, 28.8 per cent of Tarneit residents were born in India. The corresponding proportions were 14.9 per cent in Point Cook and 13.5 per cent in Craigieburn, which is also home to a substantial Iraqi-born population. Narre Warren South has a large Afghan and Hazara community.
The data does not establish that migrant households are more likely to default than other borrowers. Nor does it provide a basis for attributing financial distress to ethnicity.
What it does show is that mortgage pressure is concentrated in places where many recent migrants, young families and first home buyers have settled because housing was once comparatively affordable.
Those buyers often purchased detached homes in new estates with mortgages that were large relative to their incomes. Many households also face long commuting costs, limited public transport, childcare expenses and the cost of supporting larger families.
Employment conditions add another layer of vulnerability.
The unemployment rate in the Melbourne South East statistical region stood at 6.3 per cent in May. It was 6.2 per cent in Melbourne West and 5.9 per cent in Melbourne North West, compared with 4.9 per cent across Victoria and 4.4 per cent nationally.
Mortgage Stress Victoria, a free legal and financial counselling service that grew out of WEstjustice in Werribee, reports a similar geographic pattern among its clients.
Chief executive Nadia Harrison has said the organisation’s data shows mortgage stress is highest in outer suburban growth corridors, with young families and migrants forming a large share of those seeking assistance.
Since 2022, the service has helped prevent the repossession of at least 204 Victorian homes.
The Victorian Government provided a further $4 million in May and raised the service’s household income eligibility threshold from $75,000 to $90,000.
The change reflects the extent to which mortgage difficulty is no longer confined to households traditionally considered low-income. A family can earn a relatively strong combined income and still struggle if it is servicing a large mortgage while meeting childcare, transport, insurance and other essential costs.
First home buyers in the firing line
The clearest warning concerns first home buyers, particularly those who entered the market with small deposits.
Equifax data reported in June showed Victorian first home buyers had an early arrears rate of 0.89 per cent, equal to the highest in the country and roughly two to three times the rate among other borrowers.
Serious arrears of 90 days or more were also close to twice as high among first home buyers, while delinquency had reached a seven-month peak.
Many of these borrowers entered the market recently.
After the Commonwealth expanded the First Home Guarantee last October, removing income limits and increasing Melbourne’s property price ceiling to $950,000, more than 21,000 buyers used the scheme nationally during its first 11 weeks. Applications from people aged 18 to 25 increased by 22.8 per cent.
The scheme allows eligible buyers to purchase with deposits as low as 5 per cent without paying lenders mortgage insurance. It helps people enter the market earlier but can also leave them with little protection against falling property values.
Melbourne dwelling values subsequently declined by 2.6 per cent in the June quarter, while Cotality data showed 19 per cent of Melbourne unit resales were completed at a nominal loss.
A citywide fall does not mean every buyer is in negative equity. Outcomes depend on the suburb, dwelling type, purchase price, deposit and the amount of principal repaid.
But for someone who bought with a 5 per cent deposit, a decline of about 3 per cent can erode much of their initial equity before stamp duty, agent fees and other selling costs are considered.
Equifax general manager Kevin James has warned that recent buyers forced to sell could discover that much of the money they contributed to the property is no longer recoverable.
Negative equity does not normally create an immediate problem for borrowers who can continue making repayments. It becomes more serious when a household must sell because of unemployment, separation, illness or prolonged financial hardship.
Despite recording the country’s largest number of mortgage hardship notices, Victoria remains under-represented in formal personal insolvency. The state accounted for 20.5 per cent of Australia’s 12,257 personal insolvencies in 2024-25, below its 25.6 per cent share of the national population
The risks would increase if prices fell further. Morgan Stanley has raised the possibility of a national decline of as much as 10 per cent, although property forecasts remain uncertain and market conditions vary considerably between cities and suburbs.
There is one counterintuitive finding in the research.
Despite recording the country’s largest number of mortgage hardship notices, Victoria remains under-represented in formal personal insolvency. The state accounted for 20.5 per cent of Australia’s 12,257 personal insolvencies in 2024-25, below its 25.6 per cent share of the national population.
That may indicate Victorian households are exhausting other options before surrendering their homes or entering insolvency. These can include hardship agreements, refinancing, interest-only arrangements, drawing on savings, receiving family assistance, taking second jobs or cutting household spending.
Formal insolvency is also an imperfect measure of mortgage distress. Homeowners may avoid bankruptcy because secured creditors can still pursue the property, while some struggling households sell before their situation reaches that stage.
The National Debt Helpline says mortgages have become the leading reason Victorians seek help, ahead of credit cards and tax debt, during its busiest national year since 2018-19.
The question is whether households that have so far managed to remain afloat can continue doing so through a period of higher repayments and weaker property prices.
For many families across Melbourne’s growth corridors, mortgage stress has not yet become repossession or bankruptcy. It is appearing instead in cancelled expenses, depleted savings, additional work, overdue bills and repeated calls to lenders for more time.
That pressure may be less visible in official default figures, but it is increasingly shaping everyday life in the suburbs where Victoria continues to grow.
People experiencing difficulty with mortgage repayments can contact the National Debt Helpline on 1800 007 007 or Mortgage Stress Victoria on 1800 572 292. Both services provide free and confidential assistance and advise borrowers to seek help as early as possible.
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