Debt strain ... outer suburban families have the highest repayments compared to incomes.

OUTER suburban families are facing double or even triple the debt strain of inner-city households, new research reveals.

A report by the nation’s foremost living costs expert reveals metropolitan fringes typically have the highest repayments compared to incomes and therefore are the most susceptible to future interest rate increases.

National Centre for Social and Economic Modelling (Natsem) principal research fellow Ben Phillips finds the areas with the highest median debt-to-income levels are the northwest edge of Sydney and north Perth, where households typically have to fork out 14 per cent of their income towards loan repayments, followed by western Sydney and Melbourne’s west, at 11 per cent, along with south Perth, then Brisbane’s south at 9 per cent.

The smallest median burdens are in inner Brisbane, at 3 per cent, then inner Melbourne and Perth and inner north Sydney, at 4 per cent.

All those percentages are dragged down by households that do not have mortgages, either because they rent or have paid off their home, Mr Phillips said.

At greatest risk of debt difficulties ... Melbourne's skyline towers over houses in the foreground as the suburban area expands west out to Point Cook housing estates.Source:News Corp Australia

The AMP-Natsem report also compares the most indebted 10 per cent of households by area to reveal a very different story — those in most strife are in inner-city areas who have likely outlaid a large amount on a home recently. Repayments consume upwards of 40 per cent of income among the most indebted 10 per cent of households in inner Brisbane, Sydney and Perth.

“If something goes wrong with the economy, they are the ones who are going to struggle,” Mr Phillips said, particularly if interest rates or unemployment rise sharply.

The areas with the smallest borrowing-to-earnings ratios are country South Australia, Victoria, Tasmania and NSW.

AMP chief customer officer Paul Sainsbury said households struggling with debt didn’t need to make dramatic changes. Smart, smaller decisions would suffice.

Mr Sainsbury recommended starting by getting a better handle on where money is going.

“When you are aware of spending you can start to make active choices,” for example, by reducing the amount spent on going out and instead putting it towards paying off loans, he said. “It’s like compound interest in reverse.

“Small decisions now can have very profound beneficial outcomes in the future.”

He suggested households consider using new personal financial management software. More than 100,000 people are using a service called Pocketbook to manage their budgets.