Rising Mortgage Stress Among Australian Borrowers: Key Insights from Roy Morgan


Rising Mortgage Stress Among Australian Borrowers: Key Insights from Roy Morgan


Recent data from Roy Morgan reveals that nearly 29% of Australian mortgage holders are currently facing the risk of mortgage stress, the highest level recorded since August 2024.


Despite the implementation of recent economic measures, this risk has escalated, indicating a troubling trend that began in late 2020.


Impact of Fiscal Policies

The introduction of the Stage 3 tax cuts initially alleviated some mortgage stress by boosting household incomes. This intervention reduced the proportion of "at-risk" mortgage holders from June to October. However, this relief was short-lived. By January, the percentage of those at risk had climbed to almost 28.9%, a significant increase from previous months.





Historical Context and Current Challenges

Concerns regarding mortgage stress are not new. Historical data indicates that the peak occurred in mid-2008, when 35.6% of mortgage holders were struggling financially. Today, the situation mirrors those challenging times, with 826,000 more Australians now classified as "at risk" compared to the period following the interest rate hikes that began in May 2022. Currently, the number of Australians deemed "extremely at risk" has surged to 1,043,000. This figure represents 18.9% of mortgage holders, significantly higher than the ten-year average of 14.6%.


According to Roy Morgan, the Reserve Bank's decision to maintain interest rates at the end of last year may have contributed to the recent increase in mortgage stress.


Projections and the RBA’s Role

In mid-February, the RBA cut interest rates by 0.25% to 4.1%, a decision influenced by a year-long decline in inflation. Roy Morgan anticipates further reductions, projecting a drop to 3.85% in April. This adjustment is expected to lower the number of mortgage holders considered "at risk" by an additional 33,000.





Unemployment’s Impact on Mortgage Stress

The Roy Morgan report highlights that first home buyers across Australia are experiencing significant mortgage stress, with unemployment emerging as a critical factor. Currently, over 3.4 million Australians are unemployed or underemployed. Despite interest rate cuts, job security remains the most significant determinant of mortgage stress.


Outlook and Support

While the RBA's recent actions have provided some relief, further interest rate cuts are anticipated if inflation remains within the target range of 2-3%. Michele Levine, CEO of Roy Morgan, emphasized that while the strength of the job market over the past two years has supported household incomes, interest rates continue to play a crucial role in alleviating mortgage stress.



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