Recent RBA moves fail to significantly lower proportion of borrowers 'at risk' of mortgage stress
The proportion of Australian mortgage holders classified as ‘at risk’ of mortgage stress has remained stubbornly high, according to new research from Roy Morgan.
In the three months to August 2025, 27.9% of borrowers were deemed "at risk", a slight decrease of 0.5 percentage points from June. This figure has exceeded 25% for more than two and a half years, despite three interest rate reductions by the Reserve Bank of Australia (RBA) this year. The current level remains well above the long-term average, though below the peak of 35.6% recorded in mid-2008.
Since the RBA began raising rates in May 2022, the number of Australians considered ‘at risk’ has grown by 616,000. The official cash rate rose by 4.25 percentage points over that period, reaching 4.35% by late 2023 before the recent series of cuts. As of August, 1.42 million mortgage holders were classified as ‘at risk’.
Roy Morgan’s research also shows that the number of borrowers considered ‘extremely at risk’—those whose interest-only repayments exceed a set proportion of household income—now stands at 915,000, or 17.9% of mortgage holders. This is notably higher than the 10-year average of 14.8%.
Roy Morgan’s modelling suggests that further reductions in the cash rate could ease mortgage stress. If the RBA lowers the rate to 3.35% in November, the share of ‘at risk’ borrowers is projected to fall to 25.2%, the lowest since January 2023. An additional cut to 3.1% in December could see this figure drop to 24.8%, or 1.27 million mortgage holders.
“However, as we have previously highlighted, although the short-term impact of reducing interest rates is an immediate reduction in mortgage stress, there are counter-vailing factors that mean it can lead to further stress down the road,” said Michele Levine, chief executive of Roy Morgan. “As general interest rates are lowered, new buyers entering the market are able to borrow more money for larger loans to buy the best house they can afford at that time, and this, in turn, leads to a subsequent increase in mortgage stress due to the larger size of the average loan.
“Finally, it is important to appreciate 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 three years, and this has provided support to household incomes which have helped to moderate levels of mortgage stress over the last year.”
Meanwhile, separate research from Finder’s RBA Survey indicates that over a third of homeowners were experiencing mortgage stress in September, with many still struggling despite recent rate relief.
“While relief is starting to filter through, 35% of homeowners are still struggling to pay their mortgage in September,” said Graham Cooke, head of consumer research at Finder.
“Even with another cut expected before Christmas, you don’t need to wait to get a better deal. If you’re currently paying more than 5.5% for a variable rate, you’re probably paying too much.”
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