1.3 Million Australian Households Now at Risk of Mortgage Stress — Are You One of Them?

After months of improvement through 2025, mortgage stress is rising sharply again. Two consecutive rate hikes in February and March 2026 have unwound much of the relief borrowers experienced when the RBA cut rates three times last year. Roy Morgan Research now projects 1,319,000 Australian households — 26.6% of all mortgage holders — will be at risk of mortgage stress following the March hike. If the RBA hikes again in May, that figure climbs to 1,434,000 (28.9%). Here's what's driving it, who's most at risk, and what you can do.

How Quickly Things Have Turned Around

As recently as January 2026, mortgage stress was at its lowest point since January 2023. The RBA's three rate cuts in 2025 had brought genuine relief — stress fell from a peak of around 1,420,000 households in August 2025 to just 1,184,000 in January 2026 (23.9%).

Then the RBA reversed course.

The February 2026 hike (to 3.85%) and March 2026 hike (to 4.10%) have together erased that relief. Roy Morgan's projections show:

In just two months, back-to-back hikes have added 135,000 households to the at-risk category. A third hike in May would push the total 250,000 above where it was at the January low.

What's Driving the Rise

Three forces are combining to push more households into stress:

1. Rate hikes reversing 2025 relief

The RBA cut rates three times in 2025 (down to 3.60%), then hiked twice in early 2026 (back to 4.10%). The cash rate is now just 0.25% below the 4.35% peak reached before the 2025 cuts — and average variable rates are sitting around 6.01% p.a. (per Canstar), only marginally below where they were at that peak. The reprieve was short-lived.

2. The repayment impact of two hikes combined

Each 0.25% hike adds to repayments. With two hikes already in 2026, the cumulative impact is significant:

3. Fixed rate rollovers — the tail is still biting

The bulk of the "fixed rate cliff" passed in 2023–2024, but a residual tail of borrowers who locked in 4- or 5-year fixed rates in 2021–2022 (at rates as low as 1.9–2.5%) are still rolling onto variable rates of 6%+ in 2026. For a $600,000 loan, that transition means repayments jumping from roughly $2,580/month to $3,640/month — a shock of approximately $1,060/month or $12,700/year.

Who Is Most At Risk

Not all borrowers are equally exposed. The data points consistently to a few groups:

Low-to-middle income households

Roy Morgan's analysis shows the biggest stress is concentrated in households earning under $100,000/year. The bottom two socio-economic quintiles saw mortgage stress increase even while the national average was falling in 2025 — because wage growth in those groups was just 1.5–2.1%, far below the 7% average across all mortgage holders.

A household earning $100,000 gross (approximately $6,650/month net after tax) with a $600,000 mortgage at 6.01% faces repayments of roughly $3,593/month — that's 54% of net income, nearly double the 30% stress threshold.

First home buyers

First home buyers who purchased at 2021–2022 peak prices on low fixed rates are in a particularly difficult position. They're now rolling off those ultra-low rates onto 6%+ variable rates, at a time when Sydney prices have softened — raising the prospect of both mortgage stress and negative equity simultaneously. Entry-level Sydney house buyers spend an estimated 57.6% of combined household income on repayments at current rates (based on a dual-income couple each earning close to the median wage).

Recent purchasers with low buffers

The RBA's October 2025 Financial Stability Review identified around 0.7% of borrowers who have both a cash flow shortfall AND minimal prepayment buffers — the most acute risk group. A further 2% of variable-rate owner-occupier borrowers are in cash flow shortfall, meaning repayments plus essential living costs exceed income.

Warning Signs to Watch For

Mortgage stress doesn't always announce itself. Beyond the 30% income threshold, watch for:

Mortgage stress is the leading reason people contact the National Debt Helpline (1800 007 007) — ahead of credit card debt, ATO debt, and energy bills. Roy Morgan CEO Michele Levine noted in January 2026: "The greatest impact on whether a borrower falls into the 'At Risk' category is related to household income — which is directly related to employment."

The key message: don't wait until you've missed payments. The earlier you act, the more options you have.

What to Do If You're Feeling the Pressure

If any of the warning signs above apply to you, there are more options than most people realise — and a mortgage broker can help you navigate them at no cost. We've covered seven specific strategies in detail in our guide: 7 Practical Strategies to Reduce Mortgage Stress in 2026 →

In brief, the options include:

The worst thing to do is nothing. The May RBA meeting (4–5 May) is the next major decision point — if the March quarter CPI (due late April) shows inflation still rising, a third hike is likely. That's your window to act.

Written by Amit Narang, Mortgage Broker | Credit Representative 558902 of Outsource Financial Pty Ltd (ACL 384324)

Sources: Roy Morgan Mortgage Stress Research, January 2026 (roymorgan.com); Roy Morgan Mortgage Stress by State, December 2025 (roymorgan.com); Roy Morgan Socio-Economic Mortgage Stress Analysis, August 2025 (roymorgan.com); RBA Financial Stability Review, October 2025 (rba.gov.au); APRA Quarterly Property Exposure Statistics, September 2025 (apra.gov.au); Canstar variable rate data, March 2026 (canstar.com.au)