Rising fuel costs, higher interest rates and sustained cost-of-living pressures are combining to recreate the conditions that drove thousands of Australians out of the cities during COVID, with signs of a second significant migration wave bringing more residents to our communities.
Recent research from the Regional Australia Institute shows more than one in three metropolitan Australians, around 5.3 million people, would consider moving to the regions, with younger Australians now leading that trend. Generation Z has overtaken Millennials as the most likely cohort to leave the city, with 49 per cent considering a move.
At the same time, separate research from NGM Group reinforces that the change is not just aspirational but already underway, with 65 per cent of regional residents reporting new arrivals in their communities over the past year and nearly three in four New South Wales residents saying regional life is appealing.
Taken together, the data points to a structural shift rather than a temporary response to crisis, building on the population movements first seen during the pandemic but now driven by economic pressure as much as lifestyle choice.
NGM Group Chief Customer and Digital Innovation Officer James Cudmore said the growing appeal of regional areas reflects deeper economic change.
“What that means in practical terms is greater depth in the labour market. People no longer have to choose between career progression and quality of life in the same way they once did,” he said.
That shift is being accelerated by changes in how people work, with 65 per cent of workers saying remote or hybrid arrangements have altered where they could realistically live.
But while the lifestyle case for moving has never been clearer, mortgage brokers warn the financial pathway is becoming more complex, with tighter lending in metropolitan markets and a postcode-driven system in the regions making specialist advice critical.
Sydney-based mortgage broker James Tsolakis from Mortgage Max said rising interest rates and living costs are fundamentally changing borrowing capacity in the city.
“Borrowing money now depends totally on your income – not on what you want, not on your assets or whatever else you might have,” he said.
“It’s all about working out how much income you’ve got left after your living expenses and other expenses.”
That calculation has tightened significantly as interest rates rise. Banks are assessing loans at interest rates several percentage points above actual rates, while also taking a more conservative view of household spending as the cost of living also skyrockets.
“The bank will look at that net disposable income after expenses and say, ‘Okay, we can lend you X amount of dollars,’ but they base that on an interest rate that’s inflated by two or three percent,” Tsolakis said.
“The banks are being very cautious – they’re they’re dotting every i and crossing every t,” he said.
The result is that many average-income households are effectively locked out of metropolitan housing markets.
“This is why you’re hearing that the top five per cent of Australians are now the only people who can afford to buy a house.”
In that context, the regions present a compelling alternative — but getting there is not as simple as selling up and buying cheaper.
Reggie Hart of Thunderbolt Lending is a mortgage broker with offices in Tamworth and Jindabyne, specialising in regional and rural property and equine lending. She said regional lending operates under an entirely different set of rules.
“Mortgage broking in regional areas is really interesting because all properties are different,” she said.
“Land size is different, different banks… it’s a real specialty. Different banks like different postcodes.”
Hart said borrowers are often surprised to discover that lending outcomes can vary dramatically depending on which bank assesses the application.
“It’s really variable, because the banks don’t really understand these areas. So they take the easiest option – lend less.”
“So many of the big banks are closing in smaller towns, so there’s actually no one to talk to. That’s why mortgage brokers in regional areas are so crucial,” she said.
Tsolakis, who grew up in Aberdeen, agreed that the lack of local footprint is a big part of the problem with regional loans.
“If there’s a bank branch in the regional town, well and good, because the local manager will know, and they’ll do the loan, send it into credit for assessment, but he’ll put his positive notes on it… and it will usually get approved,” he said.
But most banks no longer have traditional branches like that in many of our towns.
That postcode variability that makes getting loans with major lenders difficult extends across the region, but locality is not the only variable that may affect how a bank rates the risk of a property. They may also assess land size, zoning, infrastructure, and the condition of buildings.
The liquidity of the property – the ability to sell it should the borrower fail to repay – may also be assessed, which is often where properties in small villages have trouble. Some lenders judge smaller villages like Tingha or Delungra, or even booming communities like Uralla, too high risk, and non-core lenders may be a more viable option for properties in those places.
“When you get above around 120 acres, the number of lenders willing to play drops away, so the pricing is usually not as sharp — there’s less competition,” Hart said.
“You’ll often find that in a given regional area, one or two banks dominate because no other bank lends as well in that postcode.”
Access to infrastructure can also be a barrier.
“Some banks won’t lend to you if you don’t have a paved road to your front gate, or power, or water, or some mix of those things,” she said.
Income assessment presents another challenge, particularly for regional borrowers whose financial structures differ from salaried city workers.
“A lot of people on the land, their incomes are much lower on paper because their entire life gets written off financially.”
“On paper, you don’t have very good income — so the banks don’t want to lend very much to you,” she said.
That is where specialist brokers become essential, particularly in structuring applications and presenting income in a way lenders will accept.
“If you’ve got off-farm income as well, banks like that. It can be a superpower… but you need a specialist who knows how to put your numbers together and write a good credit proposal.”
Hart believes if you’re looking to buy rural, you should borrow local.
“As a regional person, knowing what I know now, I’d just deal with a regional broker that understands lifestyle, the vagaries of all these postcodes,” she says.
All four major banks plus Regional Australia Bank were invited to comment on the postcode risk ratings and either declined to comment or did not respond by time of publication. Macquarie Bank did respond and said they will consider lending to all postcodes across Australia, but like all banks consider a range of factors which mean that some borrowers and loan applicants – depending on location and property type – may be subject to additional due diligence and lending requirements.
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