What life’s like in Melbourne’s most mortgage-stressed suburb now

November 7, 2026 — 5:00amJot Gill and her husband are working every hour they can, and cutting back on entertainment, groceries and personal spending to “make ends meet” to pay their mortgage.The personal carer and mother of two was previously working three days a week, trying to spend as much time as possible with her three-year-old daughter, but has had to take on more hours, often working four or five days to help pay the bills.Jot Gill has had to take on more work as a personal carer to cover her mortgage alongside increasing grocery bills and rising prices across the board, missing out on time with her kids.Ruby Alexander“It’s less time for the kids, and more time for the job because we have to work,” she said. “Half of the salary is going on just the groceries, there’s nothing left for other expenses. And the mortgage, my god.”Gill and her husband had been paying any spare money into their mortgage “to get rid of the thing”, but increasingly there’s nothing left at the end of the week.“It’s hard to survive,” she said.Gill lives in Pakenham, in Melbourne’s outer south-east, where many homeowners are feeling the pinch. It’s the suburb with the greatest share of borrowers in arrears on their mortgage in Australia. About one in 35 homeowners, or 2.88 per cent, are late on repayments by 30 days or more based on June data from S&P Global Ratings.With the Reserve Bank hiking the cash rate to 4.85 per cent on Tuesday, the highest since 2008, Australian households are watching their mortgage repayments soar amid a cost-of-living crisis.The rise adds about $100 a month to repayments on a $600,000 mortgage.Pakenham’s median house price, at $712,000 in September on Domain data, means many residents who bought within the past year may be making payments on about that amount.PRD Real Estate chief economist Dr Diaswati Mardiasmo said the “compounding effect” of the five rate hikes since the start of the year was hitting borrowers. She estimated the average Melbourne homeowner would see their repayments increase a total of between $480 and $550 per month once Tuesday’s hike flows through.She said last time Australians saw rates rise over 2022 and 2023 households were more prepared, with more savings.“It’s a really different situation right now,” she said.RBA governor Michele Bullock acknowledged on Tuesday this would be “very challenging” for some households, but said “some pain now will prevent even worse pain down the track”.The impact of belt-tighteningFor shopfitter Stan Grigoriadis, it’s “very difficult” to see how it could get much worse – his mortgage will go up another $107 per month after Tuesday’s announcement.Shopfitter Stan Grigoriadis said it’s becoming “very difficult” to manage his budget as it gets “smaller and smaller” with each rate hike.Ruby Alexander“It’s like everyone’s just forgotten all about us,” the 55-year-old said. “It’s getting harder to manage your finances, and figure out your budget, because it’s getting smaller and smaller.”He and his wife have three teenage children at home, ranging from 17 to 19, and he imagines they’ll be staying there for some time because “they can’t afford to go anywhere” as rents in the area also soar.While the RBA governor said unemployment remained “relatively low” – 4.6 per cent in September, the latest ABS data – Grigoriadis felt his industry was being hit especially hard as people tightened their belts.“Retail’s going bad,” he said.“Especially when companies like David Jones are going to start closing stores down... That’s hundreds of jobs. Not just for them but, in the long run, for people like us in the construction industry. We do their cosmetics [counters] and all their cupboards. But they can’t afford the rent, and the bigger companies... they don’t care.”Uber driver Naseem Ahmed said he’s feeling the impact of people cutting back on spending.“Obviously when people are saving money, they don’t want to use Uber,” he said. “So we have less jobs, we have to wait a lot for the jobs, and the jobs pay less.”He’s trying to step up the number of hours he does every day, but said he was pushing the boundaries of what felt safe.“I feel like too much driving is very risky... I’ve driven 350 km today, in traffic the whole day. It’s not easy,” he said.He gestured to the small bag of groceries he was taking home to his wife and two children and said the “little items” in it had cost him more than $100. The choices they were having to make to stay in their Pakenham home were “heartbreaking”, he said.“I don’t want to sell it. It’s my children’s home,” he said. “This was the cheapest and most affordable town in the south-east… But the mortgage is killing us.”The RBA governor said on Tuesday an increase in the number of people taking on multiple jobs suggested those who wanted more work could get it. Mardiasmo wasn’t sure this was a good thing.“Technically we’re not supposed to need a second job,” she said. “That’s giving up family time, that’s giving up mental health, that’s giving up work and life balance.”Sticking to a strict budgetNot everyone can take on more work. Pensioner John Saddington said the rate hike “hurts” people on a fixed income because they often don’t have anything to cut.He’s paying $1300 a fortnight on his mortgage after the September rate hike, $80 more than his previous repayment, and he’s waiting to hear how much further it will go up after Tuesday’s announcement.“My luxuries have gone right out the window,” he said. “I’m drinking soda water instead of Coke.”Even for those who feel they’re in a position to weather the storm on their mortgage, the price difference on every grocery shop is “very noticeable”.“You have to get a bit more strict with the budgeting,” factory supervisor Dale Paterson said.Factory supervisor Dale Paterson feels lucky to not be as worried about recent rate hikes, but he knows others are doing it tough.Ruby Alexander“You’ve got to be eyeballing more on pricing... paying a bit more attention to the price per kilo of everything.”While Paterson is paying off a mortgage, he said “making [his] way up the ladder” had given him some buffer, but he could see friends were already struggling.“I’m lucky, it’s not affecting me as much, but I feel like for other people it definitely will.”Property alerts are now available in The Age app. Turn them on to receive the latest market news and trends.More:Victoria residential propertyHome loansInterest ratesProperty marketProperty pricesAffordable housingFinancingHousing affordabilityProperty listingsFrom our partners