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New data released by Roy Morgan has revealed that 26.5 per cent of mortgage holders are now “at risk” of “mortgage stress”, showing a decline of 1.2 per cent from the previous month. The risk of mortgage stress has now dropped for the second consecutive month.
The research was conducted in the three months to March 2025. Notably, the Reserve Bank of Australia (RBA) cut interest rates during this period to 4.1 per cent in its first rate cut since November 2020.
According to Roy Morgan, the share of mortgage holders at risk of mortgage stress is now the lowest since June 2023, coincidentally when interest rates also sat at 4.1 per cent before the RBA’s November 2023 rate hike that brought the cash rate up to a 12-year high.
Since the beginning of the monetary policy tightening cycle in May 2022, the number of Australians at risk of mortgage stress has increased by 644,000, while the number of Australians considered “extremely at risk” is now 990,000, representing 18.5 per cent of mortgagors.
This still sits well above the long-term decade average of 14.7 per cent, according to Roy Morgan.
Unsurprisingly, these levels of mortgage stress are set to fall even further should the RBA cut interest rates a second time during the upcoming May board meeting, as many economists expect.
Roy Morgan has modelled the impact of an additional 0.25-bp cut (which would bring the cash rate to 3.85 per cent), which would see the number of mortgage holders at risk of stress fall by 13,000 to 1,438,000 (26.2 per cent of mortgage holders, down 0.3 per cent points).
CEO of Roy Morgan, Michele Levine, said: “Even better news for those under mortgage stress is that so-called ‘core inflation’, also known as the ‘trimmed mean’, dropped into the RBA target range of 2-3 per cent for the first time in December 2024 (2.7 per cent) and remains there at 2.7 per cent in February 2025.
“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 two years (the latest Roy Morgan estimates show over 900,000 new jobs created compared to April 2022) and this has provided support to household incomes which have helped to moderate levels of mortgage stress over the last year.”
[RELATED: Trimmed mean inflation set to enter target band]
