Stress indicators improve, yet higher rates could add borrowers back to the “at-risk” pool
New Roy Morgan research estimates 23.9% of Australian mortgage holders — about 1,184,000 people — were “at risk” of mortgage stress in January 2026. The figure is down four percentage points from August 2025.
Roy Morgan said this was the lowest share of mortgage holders considered “at risk” since January 2023, with the peak at 35.6% in mid-2008.
The research said the number of Australians “at risk” fell by 449,000 compared with a year earlier, during a period when the Reserve Bank of Australia cut rates by a total of 0.75 percentage points, from 4.35% in February 2025 to 3.6% in August 2025.
Within the broader group, Roy Morgan put the number of “extremely at risk” at 789,000, or 15.9% of mortgage holders. It said this was slightly below the long-run average of 16.3% over the past two decades.
Source: Roy Morgan
The analysis also modelled the impact of recent and potential cash-rate changes. The Reserve Bank lifted interest rates in February by 0.25 percentage points to 3.85%, its first increase in more than two years, after inflation picked up. Roy Morgan linked the shift to the ABS annual inflation estimate rising from 1.9% in the year to June 2025 to 3.8% in the year to January 2026.
Based on Roy Morgan’s modelling, the February increase would lift the share of mortgage holders “at risk” from 23.9% in January to an estimated 24.7% — about 1,225,000 people — a rise of 41,000.
If rates rise again by 0.25 percentage points to 4.1% next week, Roy Morgan estimated the “at risk” share would climb to 26.6%, or 1,319,000 mortgage holders, up 135,000 from January’s level.
It also estimated the proportion could reach 28.9% in April — about 1,434,000 mortgage holders — if the higher rate setting flows through, an increase of 250,000 from January.
Source: Roy Morgan
Roy Morgan said it classifies mortgage holders as “at risk” when repayments exceed a threshold share of household income, taking income and spending into account. It defines “extremely at risk” where even interest-only repayments exceed a set proportion of household income.
The firm said its approach assumes other conditions remain unchanged, and pointed to labour market conditions as a major driver. It cited its unemployment and under-employment estimate of 3,494,000 people, or 21.5% of the workforce.
“The outbreak of conflict in the Middle East in recent weeks, following the Israeli and US attacks on Iran, has introduced a considerable amount of uncertainty into global economic forecasts,” said Michele Levine (pictured right), chief executive of Roy Morgan.
“Given this uncertainty, Australia could face a wave of inflation prompted by soaring energy prices, or an economic slowdown due to rising energy prices impacting demand elsewhere in the economy.
“The high degree of uncertainty about the conflict in the Middle East has introduced an additional, and volatile, variable into the decision making of the RBA when it meets next week.”
Levine stressed that interest rates are only one of the variables that determines whether a mortgage holder is considered “at risk” – the largest impact on whether a borrower falls into the “at risk” category is related to household income – which is directly related to employment.
“The employment market has been strong over the last four years (Roy Morgan estimates show over 1.1 million new jobs have been created since the Albanese Government was elected in May 2022), and this has provided support to household incomes which have helped to moderate levels of mortgage stress despite interest rates increasing rapidly since May 2022,” she said.
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