The Reserve Bank of Australia’s (RBA) three interest rate hikes this year have pushed Australian mortgage rates to near record-high levels globally.
Chart from Justin Fabo at Antipodean Macro
As a result, mortgage stress has risen to its equal highest level since the Global Financial Crisis (GFC), according to Roy Morgan Research.
In the three months to June, Roy Morgan estimates that 30.3% of households were at risk of mortgage stress, equating to 1,606,000 people – up 68,000 on a month earlier.
The number of Australians ‘At Risk’ of mortgage stress is up by 115,000 on a year ago after the RBA cut interest rates in May 2025 (-0.25%) and August 2025 (-0.25%) but then raised them back up in February 2026 (+0.25%), March 2026 (+0.25%) and again in May 2026 (+0.25%).
As a result of these changes, interest rates were at 4.35% in June 2026, 0.5% higher than a year earlier in June 2025 (3.85%).
The latest pricing from financial markets has ascribed a 68% probability of another 25 bp rate hike by the end of the year, which would take the official cash rate up to 4.6% and increase mortgage stress further:
Roy Morgan explains that it “uses a conservative forecasting model, essentially assuming all other factors apart from interest rates remain the same”. However, Roy Morgan notes that “unemployment is the key factor which has the largest impact on income and mortgage stress”.
Australia’s unemployment rate has risen to its highest level since late 2021. It will likely rise further amid interest rate hikes, the slowing economy, the rollout of AI, and ongoing strong immigration.
Therefore, mortgage stress would rise even further if unemployment continues to rise.
First-home buyers who recently purchased using the Albanese government’s 5% deposit scheme are the most at risk of falling into stress, as they borrowed large amounts (LVRs of up to 95%) and have seen mortgage rates rise and home prices fall across the major capitals.
