One in three Australian mortgage holders is now at risk of mortgage stress.
Roy Morgan puts 32.5% of owner-occupier mortgage holders - about 1.79 million Australians - at risk of mortgage stress in July 2026. That is the highest level in 18 years, after three cash rate rises in the first half of the year.
Data to July 2026. Cash rate held at 4.35% in August; the RBA board next meets 29 September 2026.
Where things stand
The key national numbers behind the pressure on household budgets.
Picture 100 mortgage-holding households. Around 20 of them are extremely at risk - even the interest-only portion of their repayment exceeds a critical share of their household income. Roughly 13 more are at risk, with full repayments above the stress threshold for what they earn and spend. That leaves barely two in three comfortably covering the loan.
Every square is one of 100 mortgage-holding households. ~20 extremely at risk ~13 more at risk
of mortgage holders at risk of mortgage stress in July 2026 - 1,786,000 people, up 180,000 in a month (Roy Morgan).
extremely at risk - around 1.08 million people in May 2026, well above the two-decade average of 16.4%.
RBA cash rate since May 2026, after rises in February, March and May. Variable home loan rates typically sit 2-3 points higher.
annual CPI inflation to July 2026 - cooling, but still above the RBA's 2-3% target band, which keeps rate cuts off the table for now.
The record high in Roy Morgan's series is 35.6%, reached in mid-2008 when the cash rate hit 7.25%. July 2026 is the closest Australia has been to that mark since.
How we got here
Relief in 2025 was reversed within months. Repayments that had just started falling went straight back up.
- 2022-2023
The fastest tightening cycle in a generation lifts variable mortgage rates from around 2.5% to over 7%, resetting repayments for millions of borrowers.
- May and August 2025 - cuts
The RBA cuts twice, taking the cash rate to 3.60%. By January 2026 mortgage stress falls to 23.9% - its lowest level in three years.
- February, March and May 2026 - three hikes
Inflation re-accelerates (headline CPI doubled from its mid-2025 low), and the RBA raises the cash rate three times, back to 4.35%. Each hike pushes another cohort of borrowers over the stress threshold.
- June - August 2026 - on hold
The cash rate is held at 4.35%, but the board says it will hike again "if upside risks materialise". Major banks do not expect cuts before 2027.
Six straight months of rising stress
Share of owner-occupier mortgage holders at risk of mortgage stress, 2026.
What it means in dollars
With an average new loan of roughly $620,000 and variable rates typically 2-3 percentage points above the cash rate, most borrowers are paying variable rates in the mid-6% to low-7% range.
The 0.75 points of hikes in early 2026 alone added around $200 a month - about $2,400 a year - to repayments on an average new loan. That comes on top of the 2022-23 cycle, which had already lifted repayments by well over a thousand dollars a month for many households, and on top of grocery, energy, insurance and rates bills that are still rising at 3.5% a year.
Australia's household debt-to-income ratio of roughly 190% is among the highest in the OECD, which is why each quarter-point move hits Australian budgets harder than it does in most comparable countries.
Illustrative only, using indicative variable rates around 2.25 points above the cash rate. Actual rates and repayments vary by lender, loan and borrower.
The dollars at risk
Putting a value on the stress: from the total mortgage book down to the loans genuinely at risk of forced sale.
The gap between $570 billion "at risk" and $28 billion non-performing is the story of Australian mortgage stress: hundreds of billions of dollars of loans are being kept current only by households cutting everything else. Stress is a survey classification, not a default - but every extra rate rise, and especially any rise in unemployment, converts part of the upper tiers into the bottom one. Historically only a small fraction of non-performing loans proceed to mortgagee-in-possession sale, with most cured through hardship arrangements, refinancing or voluntary sale.
Estimates: owner-occupier share taken as ~two-thirds of total housing credit; Roy Morgan at-risk share applied to loan value (its person-based share slightly overstates loans as couples are counted twice, offset by stressed loans carrying larger-than-average balances - Equifax puts the average late-stage delinquent loan at $403,000 versus ~$349,000 across the book).
Who is hit hardest
Mortgage stress is not spread evenly. Households earning under $100,000 a year are far more likely to be extremely at risk, and their stress has risen continuously since mid-2024 - they got no relief even when rates fell in 2025.
The number of mortgage holders extremely at risk jumped 18.3% in the six months to June 2026, with the sharpest rises concentrated in the two lowest socio-economic quintiles - the 40% of Australians with the least financial buffer. Higher-income households saw stress fall sharply through 2025 before rising again in 2026; lower-income households only ever saw it climb.
Unemployment, not the interest rate itself, remains the single biggest trigger that converts "at risk" into missed payments. A borrower who loses their income moves from stretched to delinquent very quickly.
Growth in the share of mortgage holders extremely at risk. Source: Roy Morgan, August 2026.
How Australia compares
"Mortgage stress" is measured differently in every country, so the cleanest like-for-like comparison is how much debt households carry against their income - the fuel that stress runs on.
Household debt as a share of net disposable income, 2024. Source: OECD (January 2026 release); New Zealand: RBNZ. Australia ranks third of 38 OECD countries.
Australian households owe $2.23 for every dollar of yearly disposable income - the third-highest burden in the OECD, more than double the United States and well above the United Kingdom.
The structure of the loans matters as much as the size. Most American borrowers hold 30-year fixed-rate mortgages, so central bank hikes barely touch existing repayments. British borrowers typically fix for 2-5 years, and New Zealanders for 1-2, so hikes arrive with a lag. Most Australian mortgage debt is variable, which means every RBA move flows through to household budgets within weeks.
High debt plus fast pass-through is why Australian mortgage stress reacts so sharply to rate decisions - and why the three hikes of early 2026 pushed the at-risk share from 23.9% to 32.5% in just six months. New Zealand's short fixed terms make it the closest comparison; UK stress peaked later than Australia's in the 2022-23 cycle as fixed deals rolled off; US delinquency has risen mainly in credit cards and auto loans rather than mortgages.
The problems it causes
Mortgage stress rarely shows up first as a missed payment. It shows up in everything a household cuts before the mortgage.
Living standards are cut first
Stressed households protect the mortgage by cutting everything else: groceries, insurance, healthcare, heating and cooling, car servicing, children's activities. Delinquency stays low precisely because families absorb the pain elsewhere - which is why arrears understate the problem.
Savings buffers drain away
Offset and redraw balances built up during 2020-21 have been the shock absorber. Once a household's buffer is gone, a single setback - a car repair, a medical bill, reduced hours - can tip them straight into arrears.
Mental health and relationships suffer
Financial stress is strongly linked to anxiety, depression, sleep problems and relationship breakdown. Consumer sentiment fell to a multi-decade low of 80.6 in June 2026 - a measure of how heavily this weighs on households.
Arrears are rising in dollar terms
Bank arrears remain low as a share of loans (roughly 1% non-performing, ~0.7% early-stage), but the dollar value of mortgage arrears rose 6.8% year on year, and the average loan in late-stage delinquency climbed from about $371,000 to $403,000.
Forced sales and credit damage
Borrowers who can't recover face hardship arrangements, then default listings that stay on a credit file for five years, and ultimately forced sale - often into a market that has been cooling since lending tightened in 2026.
The whole economy slows
When a third of mortgage holders are stretched, discretionary spending collapses across retail, hospitality and services. That is partly the RBA's intent - but it costs jobs and hours, and job loss is the very trigger that turns stress into default.
Get the next update
One email when the numbers move - RBA decisions, monthly stress figures and what they mean for your repayments. No spam, unsubscribe any time.
We only use your address to send mortgage stress updates.
If you are struggling right now
Help is free, confidential, and acting early gives you far more options. You have legal rights.
Free, independent financial counsellors. They negotiate with lenders every day and can explain your options before you miss a payment.
Under the National Credit Code you can request a hardship variation - reduced payments, a pause, or a term extension. Lenders must consider it and respond in writing.
If financial pressure is affecting your mental health, talk to someone. 24 hours a day, 7 days a week. Beyond Blue: 1300 22 4636.
Know your rights: asking for hardship help does not, by itself, put a default on your credit file. If your lender refuses a reasonable request, you can take it to the Australian Financial Complaints Authority (AFCA, 1800 931 678) for free. ASIC's Moneysmart website has plain-English guides to hardship, refinancing and financial counselling.