Drowning in debt: Qld mortgage stress hotspots exposed

Queensland is home to the nation’s credit pressure point, with alarming new data showing almost three-quarters of Toowoomba homeowners were battling mortgage stress.

The analysis uncovered Australia’s 10 credit stress hotspots, based on mortgage arrears, missed loan repayments, and credit score data.

The report also found the average loan size for Queensland owner-occupiers jumped 12 per cent — the fastest year-on-year growth bar WA, at 13 per cent.

A staggering 74 per cent of homeowners in the affordable growth market of Toowoomba, west of Brisbane, were doing it tough, according to the research by Real Credit Repairers.

1230 East Egypt Rd, Fordsdale was listed as a mortgagee in possession sale

Forced sales currently on the market included a 165.8ha equestrian property outside Toowoomba known as Hillview Stud, comprising a four-bedroom home, guesthouse, horse facilities and mixed farming land.

Nerang on the Gold Coast was the only other Queensland suburb among the top 10, with researchers noting more than 2 per cent of mortgage holders there were already in arrears.

Each state and territory had at least one suburb on the list — Victoria had two.

Other Queensland properties listed as “mortgagee in possession” included two townhouses in Hamilton, a post-war home with approved architectural plans in the same sought-after inner city suburb, two brand-new units in Gaythorne, a five-bedroom house in Rochedale, and a development site in Southport on the Gold Coast.

70 Queens Rd, Hamilton will be sold with approved architectural plans

“Many of the hardest-hit suburbs are in outer-metro growth corridors … where families bought at the edge of affordability when interest rates were at record lows,” Real Credit Repairers director Dennis Cowper said.

“Now, as repayments rise and inflation pushes up the cost of everyday living, many households are feeling the strain.”

The data showed the average new loan in Queensland was $662,000 in 2025 Q2, up from $591,000 a year ago.

“Rising loan sizes reflect households taking on larger debts to access the property market, often in response to higher property prices and competitive conditions,” Mr Cowper said.

“States with double-digit growth (QLD, WA, SA, NT) may be more exposed to future financial pressures, as borrowers in these regions are stretching further relative to incomes.”

This Southport development site is also on the market

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It comes as research from Ray Morgan, shared by Bright Agent, shows 28.4 per cent of Aussie mortgage holders at risk of mortgage stress in the three months to June 2025, the highest rate since January.

Just under 20 per cent of mortgage holders were now considered “extremely at risk”, compared to the 10-year average of 14.8 per cent.

“Families are doing it tough. House prices are rising, mortgage stress is hovering around record highs, household budgets are stretched to breaking point,” Bright agent co-founder Aaron Scott said.

“Young people, especially first-home buyers, need to do everything they possibly cannot to exceed their means and savings.”

The owner lost these two city townhouses

But pain for struggling households could be waning, with the latest economic outlook from S & P Global Ratings concluding overall mortgage arrears would remain low as households “prioritised mortgage repayments over spending”.

“I think interest rates are clearly on the way down and are forecast to be lowered further, from an arrears perspective that will track closely with what happens on the interest rate front,” S & P Global director Erin Kitson said.

“You will see arrears continuing to gradually come down. But what will be interesting on the lending front will be what happens to mortgage competition and refinancing levels.”

She warned arrears would not return to the historic low levels recorded prior to the interest rate hikes from May 2022, but noted factors shielding the nation, including rising property values, a three per cent mortgage buffer set for lenders nationwide, and low unemployment.

S & P Global director Erin Kitson during an appearance on Sky News in 2022. Picture: Supplied / Sky News Australia

“If you have equity, that enables you to voluntarily sell and get out of your position.”

S & P’s data focused specifically on missed mortgage payments showed Toowoomba with an 8.96 per cent arrears rate — far lower than Real Credit’s figure which covered a wider range of pressures, but still significantly higher than other regions surveyed.

Toowoomba’s older housing stock and long-term unemployment had impacted homeowners, while a shifting local job market post-Covid in Nerang had left some residents exposed, Mr Cowper said.

“Australians took on larger mortgages during the boom years, but with the cost of living rising faster than wages, even a single missed payment can snowball into long-term stress,” he said.

Another mortgagee sale at Rochedale

On the flip side, Queensland suburbs where residents had the strongest credit scores included Hamilton and Indooroopilly — areas with higher incomes, established housing markets and access to support services or financial advice.

Overall, the report noted the combination of larger average loan sizes, and a high rate of refinancing, suggested households were stretching their borrowing capacity while also shopping around for cheaper finance.

“This is an early warning signal of financial strain, even in a low-rate environment.

“It points to a reliance on refinancing as a coping mechanism for rising loan balances.”

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