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The figures, published in the June 2025 edition of illion’s Consumer Stress Barometer, showed that renters, young families, and low-income households are bearing the brunt of deteriorating financial conditions. The report also found that credit card delinquency among 25- to 29-year-olds has surged by 8 per cent over the same period.
Household savings have dropped by 4.5 per cent since January, while rental prices have risen by 6.8 per cent, compounding financial strain at a time when inflation remains sticky and wages struggle to keep pace.
Barrett Hasseldine, head of modelling at illion, said the findings should prompt lenders to reassess how they monitor borrower risk.
“The latest figures should serve as a clear warning to lenders,” Hasseldine said. “While mortgage holders may be seeing some stabilisation, default risk is quietly rising again, particularly among borrowers with no property equity, limited savings, and rising debt commitments. It’s essential that lenders continuously profile and reassess borrower risk, not just at the point of onboarding, but throughout the lifecycle of a loan.”
Hasseldine called for greater adoption of advanced analytics to support credit risk decision making, highlighting the uneven distribution of financial stress across demographic groups.
He said lenders should lean more heavily on real-time data and artificial intelligence to proactively identify distressed borrowers before they fall into arrears.
“From our perspective, continuous credit health monitoring is no longer optional – it’s essential,” Hasseldine continued. “Lenders need to be equipped to detect early warning signs and ensure support is offered early.”
The report comes as the Reserve Bank faces a delicate balancing act between taming inflation and avoiding over-tightening in a weakening consumer environment.