Three years after migrating to Australia from Africa, Lea moved into her dream house in 2019.
- In some of Melbourne’s most multicultural postcodes, an expert says up to 80 percent of households are struggling financially.
- Recent data shows seven of the top 10 Australian postcodes facing mortgage stress are in Victoria
- A financial counselor says migrants face additional mortgage pressures
The spacious two-storey property in Melbourne’s sprawling outer southeast was perfect for her then-husband and four kids.
Three years on, the decision to purchase a $900,000 home and land package in Cranbourne is increasingly becoming a nightmare.
Lea, who asked her surname not to be published, is now in the final stages of settling a divorce.
She is the sole carer of her children, and said her wage as an aged care worker was being stretched to afford the $2,500-a-month mortgage repayments.
Lea is dreading next year, when the low-interest portion of her loan will need to be re-fixed, inevitably at a much higher rate.
“The pressure is getting harder and harder. Maybe in the future I’m thinking to sell and buy a small house that we can manage with the kids,” she said.
Aspirational migrants like Lea are at the forefront of Australia’s mortgage stress crisis, financial experts say, with boom suburbs in Melbourne’s fringe filled with owners struggling to make their repayments.
Multicultural suburbs among those with most mortgage stress
Some of Melbourne’s most multicultural suburbs, including Narre Warren and Craigieburn, are among those with the highest levels of mortgage stress, according to analyst Martin North.
Mr. North, whose company Digital Finance Analytics surveys about 1,000 homes a week nationally, defines “financial stress” as a household’s spending being greater than its income.
“In some of these postcodes, we are seeing 75 or even 80 percent of households struggling with cash flow pressures now, and that’s before the latest rate rise,” he said.
“We are seeing a considerable amount of pressure in those ethnic communities based on the mortgage stress data that’s available currently.
“Of course, that doesn’t mean they’re going to default tomorrow, but it does signal significant pressure on the household.”
Seven of the top ten Australian postcodes facing mortgage stress in Mr North’s most recent monthly analysis were located in Victoria.
They were postcodes 3805 (Narre Warren, Fountain Gate), 3806 (Berwick), 3064 (Craigieburn, Roxburgh Park, Mickleham) 3350 (Ballarat), 3037 (Sydenham) and 3810 (Pakenham) and 3977 (Cranbourne).
More culturally-diverse people seeking financial counseling
Rachna Madaan-Bowman, a financial counselor at South East Community Links, said she had seen an increase in culturally-diverse clients seeking help in the last six months.
“We see people from India, Sri Lanka, Afghanistan, Cambodia, Burma, and people who are Anglo-Australians coming in and requesting assistance because there’s that fear that if they don’t act quickly, they’re going to lose their house, she said.
Ms Madaan-Bowman said many recent migrants faced additional pressures when it came to paying off their mortgages.
“A lot of migrants might be supporting their families overseas. It comes from a place of a sense of duty and obligation that they have for their parents,” she said.
But there have been other hurdles, including well-documented issues of increased wage theft, insecure work and exploitation.
Ms Madaan-Bowman said an over-complicated banking system, which was not easily understood by those with a limited grasp of English, had put some people at risk.
She said some clients were in debt to third-tier lenders who charged higher interest rates and had few, if any, hardship provisions.
“I think the next few months are going to be very difficult. The debt collection activities … have ramped up quite a lot,” she said.
‘If you are single and you lose your job, you’re going to struggle’
For first-home buyers like Nishad Fulmani, the recent interest rate hikes have come as a shock.
Mr Fulmani was among the many Australians who expected rates to remain low, following comments from Reserve Bank governor Phillip Lowe that there would be no hikes until 2024.
He said many of his neighbors in a new estate near Melton were now struggling to keep up with their repayments.
Mr. Fulmani, who is single and paying off his home on his own, had until recently been working two jobs and cutting back on his living expenses.
“If you are single and you lose your job, you’re going to struggle,” he said.
Eleven years after coming to Australia as an 18-year-old student from India, Mr Fulmani said he was optimistic about his future and proud to call himself a home owner.
“It was a great achievement. It’s just a feeling you can’t express. It’s amazing,” he said.