Mortgage stress at its lowest since February 2023

The latest figures from Roy Morgan have revealed that 26.2 per cent of mortgage holders are now “at risk” of mortgage stress over the three months to October 2024. According to Roy Morgan, this is 4.1 per cent lower than the June figures before the stage 3 tax cuts came into effect and increased household incomes.

As a result, the level of mortgage holders at risk of stress in October is the lowest for over 18 months since February 2023 and was the fourth consecutive month of easing.

With interest rates sitting at 4.35 per cent, the highest level since December 2011, the number of borrowers at risk of mortgage stress increased by 680,000 since the beginning of the Reserve Bank of Australia’s (RBA) monetary policy tightening cycle in May 2022.

Meanwhile, “extremely at risk” mortgage holders are now numbered at 928,000, representing 16.7 per cent of mortgage holders, still sitting well above the long-term decade average of 14.6 per cent.

Roy Morgan has predicted that levels of mortgage stress will continue to decline throughout summer should the RBA cut interest rates this December, although according to the majority of economists and commentators, this has become highly unlikely.

Nevertheless, due to the sharp decline in inflation over recent months (the latest monthly CPI reading for October returned at 2.1 per cent), Roy Morgan modelled the impact of a potential rate cut in December (down to 4.1 per cent).

October’s figures are projected to decrease by 12,000 in December to 1,475,000, or 25.7 per cent of mortgage holders, should the RBA unexpectedly decide to cut rates.

Furthermore, Roy Morgan projected a further decrease in the number of mortgagors considered at risk of stress from 1,475,000 in December to 1,463,000 as we venture on into 2025.

Michele Levine, CEO of Roy Morgan, said: “The rapid decline in inflation over the last year has led to hope that the RBA will reduce interest rates in the months ahead.

“However, the RBA has stated that they are keeping an eye on so-called ‘core inflation’, also known as the ‘trimmed mean’. The latest ‘trimmed mean’ estimate for inflation for the year to September 2024 was still above the desired target range at 3.5 per cent.

“Nevertheless, the decline in inflation pressures is evident and the RBA’s next move in interest rates is likely to be down. For these reasons we have modelled the impact on mortgage stress of a cut to interest rates of 0.25 per cent to 4.1 per cent.

“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.”

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Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.