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New research by market research and polling company Roy Morgan showed that 24.5 per cent of owner-occupied mortgage holders are currently classified as “at risk” of mortgage stress. Following the February increase, this figure is expected to rise to 25.3 per cent.
Mortgage stress is currently highest in Tasmania and Victoria, and these states are also expected to be the most affected by interest rate increases.
On 3 February, the Reserve Bank of Australia (RBA) announced that the official cash rate will be hiked by 0.25 percentage points, bringing the interest rate to 3.85 per cent.
Lenders have begun adjusting their own rates, though the time taken to pass on the hike has varied.
Mortgage holders are classified as “at risk” when repayments exceed a sustainable share of household income after essential living costs and “extremely at risk” when even interest-only repayments are unaffordable.
Prior to the hike, mortgage stress levels had been at their lowest level since January 2023.
If the RBA raises interest rates again in March by a further 0.25 percentage points to 4.1 per cent, the proportion of mortgage holders considered “at risk” would increase to 27.2 per cent – up 2.7 percentage points from current levels – equivalent to 1,322,000 mortgage holders.
Following the latest rate decision, both Westpac and CBA updated their outlook and now expect another rate hike in May, aligning with the existing forecast from NAB.
Only ANZ continues to view the February move as potentially “one and done”.
The findings are drawn from Roy Morgan’s Single Source survey, based on interviews with 60,000 Australians between October and December 2025.
Mortgage stress highest in Victoria and Tasmania
A breakdown of the data by state shows mortgage stress is currently highest in Tasmania, where 29.8 per cent of mortgage holders are classified as “at risk”. If the RBA proceeds with a further 0.25 percentage point increase in March, this will rise by 3.8 percentage points to 32.6 per cent – the largest increase of any state.
In second place is Victoria, with 27.2 per cent of mortgage holders currently “at risk”. This is forecast to increase to 29.9 per cent (up 2.7 percentage points) following another rate rise.
However, a potential RBA interest rate increase would hit hardest in Queensland, where the proportion of mortgage holders “at risk” would rise by 3.2 percentage points to 26.8 per cent.
Mortgage stress is lowest in NSW at 22.8 per cent. If interest rates increase by a further 0.25 percentage points to 4.1 per cent in March, this would rise by 3 percentage points to 25.8 per cent – lower than every state except Western Australia (25.5 per cent).
Households ‘extremely at risk’ rising
Among those classified as “extremely at risk”, a similar pattern has emerged.
Nationally, 17.1 per cent of mortgage holders are “extremely at risk”. If the Reserve Bank increases interest rates by 0.25 percentage points to 4.1 per cent in March, this would rise by 2.4 percentage points to 19.5 per cent – equivalent to 947,000 mortgage holders.
Once again, Tasmania records the highest proportion, with 22.1 per cent of mortgage holders “extremely at risk”, forecast to rise by 2.1 percentage points to 23.2 per cent.
Victoria follows, with 18.3 per cent currently classified as “extremely at risk”, increasing to 20.7 per cent (up 2.4 percentage points) following another rate rise.
Queensland would experience the largest increase under a further rate rise scenario, with those “extremely at risk” rising from 17.5 per cent to 20.5 per cent – an increase of 3 percentage points.
Western Australia has the lowest proportion of mortgage holders “extremely at risk” at 14.3 per cent.
Stress more pronounced in the cities
Michele Levine, chief executive officer of Roy Morgan, said that in almost all cases, mortgage stress was more pronounced in the cities than the rural areas.
“A deeper analysis of the data within states shows a consistent trend with mortgage stress higher in the capital cities and set to be more heavily impacted by interest rate rises,” Morgan said.
“However, there is a glaring exception to this trend with the situation reversed in Queensland – a state with a larger population outside the capital city than within it. In Queensland, mortgage stress is significantly higher in areas outside Brisbane – which includes large regional areas such as the Gold Coast, Sunshine Coast, and North Queensland cities like Cairns and Townsville, than Brisbane.
“The key takeout from these results is that further interest rate increases are set to be a painful experience for many Australians with almost one-in-four mortgage holders already classified as ‘at risk’ (24.5 per cent) of mortgage stress, and over one-in-six classified as ‘extremely at risk’ (17.1 per cent).”
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