New Study Predicts Further Mortgage Stress for Homeowners
New Study Predicts Further Mortgage Stress for Homeowners
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
With persistent interest rate hikes coming from the Reserve Bank of Australia (RBA), a new study by Roy Morgan has revealed that 25.3% or 1.23 million of Australian mortgage holders were classified as 'At Risk' of mortgage stress in the three months leading up to February 2023.
This number marks the highest point since September 2011's 1.3 million, and it's expected to rise even higher if inflation doesn't slow down.
The Australian Bureau of Statistics (ABS) quarterly CPI figures for the year to December 2022 showed Australian inflation reaching a 33-year high of 7.8%, but a new monthly ABS inflation indicator revealed inflation slowing to 7.4% in the year to January 2023. The latest statistics for February 2023 are yet to be released, and they may influence the RBA's decision to halt their series of interest rate increases.
If the RBA does follow the example of central banks overseas and raise interest rates by another 0.25%, Roy Morgan predicts that mortgage stress levels will increase to over 1.45 million by April 2023, marking 28.8% of all mortgage holders-the highest point since September 2011. According to the study, two further interest rate hikes by 25 basis points each will drive the number of mortgage holders considered 'At Risk' up to 31.0% or 1.565 million by May 2023.
Understanding Mortgage Stress Factors
While interest rates are a major contributing factor in determining whether a borrower is 'At Risk', Roy Morgan CEO, Michele Levine explains that household income related to employment is the variable with the largest impact. Losing jobs or a primary source of income has a more significant effect on paying mortgages than interest rates.
In February 2023, a near-record 13.5 million Australians were employed, up by over 600,000 since February 2020 pre-pandemic. The strong growth in the jobs market has attracted more Australians into the labour force, but there are now over 1.5 million unemployed Australians, roughly 10.1% of the workforce, compared to 1.17 million pre-pandemic. Therefore, unemployment is a significant determinant of mortgage stress.
It's important to note that while the number of Australians deemed 'At Risk' of mortgage stress has risen by 514,000 or 8.5% since the last year, this number remains below the record high of 35.6% or 1.45 million during the Global Financial Crisis (GFC) in early 2009. Nonetheless, homeowners may need to start making careful considerations to avoid long-term financial difficulties.
Seek out Expert Advice
With the potential for further interest rate hikes and a rising number of mortgage holders at risk of mortgage stress, it's crucial for homeowners to seek expert advice on how to manage their loans effectively. Consider refinancing to lock in a fixed rate mortgage or explore other options that may be more suitable for your financial situation. Ignoring the situation may lead to long-term financial difficulties.
Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.
The Reserve Bank of Australia’s 3 November 2026 decision to lift the cash rate target by 25 basis points to 4.85 per cent gives personal loan borrowers a fresh reason to check the full cost of credit, not just the advertised interest rate. The move follows the RBA’s assessment that inflation is likely to stay elevated for longer than previously expected, keeping pressure on household budgets and lender pricing. - read more
The Reserve Bank of Australia’s October 2026 Financial Stability Review offers a measured but important message for households weighing up personal loans: most borrowers remain resilient, yet pressure on budgets has not disappeared. The review, prepared using data available to 25 September 2026, points to higher inflation and interest rates as key reasons real household disposable income slipped slightly in the first half of the year. - read more
The Reserve Bank of Australia’s latest retail payments update offers another useful snapshot of how households are managing everyday spending, card use and short-term credit. While payment data is not the same as loan approval data, it can still tell borrowers something important: the way money moves through a household each month can affect how comfortable a lender feels about future repayments. - read more
Personal loan repayments are shaped by the amount borrowed, interest rate, loan term, repayment frequency and fees. This guide explains how repayments are usually calculated in Australia, how calculators estimate costs and why the total amount repayable can differ between loan offers. - read more
In the dynamic landscape of Australian finance, the emphasis on a robust credit score cannot be overstated. A favourable credit score serves as a gatekeeper to a world of financial opportunities, determining the ease with which individuals can access loans, the interest rates they will be eligible for, and even the prospects of securing a home in an ever-competitive market. As the average mortgage sizes surge to unparalleled heights, the significance of maintaining an advantageous credit profile escalates in tandem. - read more
Understanding what a credit score is and its importance is crucial for anyone seeking a personal loan. A credit score is a numerical representation of your creditworthiness, typically ranging from 0 to 1200 in Australia, provided by credit reporting agencies. - read more
Knowledgebase
Collateral: An asset that a borrower offers as a way for a lender to secure the loan.
No comments yet. Be the first to share your thoughts.