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New research from Roy Morgan has revealed that 28.9 per cent of mortgage holders are now considered ‘At Risk’ of ‘mortgage stress’.
The research, conducted in the three months to January 2025, marks a third consecutive monthly increase since October, though it is still 1.4 per cent lower than the figures recorded in June before the stage 3 tax cuts, which increased household income for Australians.
The share of mortgage holders ‘At Risk’ in January (28.9 per cent) is the highest it has been since August 2024. Following the introduction of the stage 3 tax cuts in July 2024, the share of mortgage holders ‘At Risk’ fell for four consecutive months.
However, it has increased for three straight months since October, after the Reserve Bank left interest rates unchanged late last year.
This figure is expected to decrease slightly by 26,000 in February 2025, dropping to 1,607,000 (28.4 per cent). Further reductions are projected for March and April 2025, as the share of mortgage holders ‘At Risk’ continues to decline in response to possible rate cuts.
Official interest rates are currently at 4.10 per cent following the RBA’s decision to cut rates in mid-February 2025 for the first time in over four years.
If the RBA cuts interest rates again to 3.85 per cent in April 2025, Roy Morgan estimates that the number of mortgage holders ‘At Risk’ will drop by another 33,000, bringing the total to 1,547,000 or 27.4 per cent of mortgage holders.
Unfortunately for borrowers, it may be some time before we see another rate cut based on the minutes from the RBA’s February monetary policy meeting, where members expressed that the February rate cut “did not commit them to further reductions in the cash rate target” following meetings.
The rather hawkish stance appeared to be predicated on ongoing uncertainty regarding inflation and employment, despite recent economic outcomes providing RBA board members with more confidence.
Commenting on the prospect of further cuts, Roy Morgan CEO Michele Levine said that “signs are good [for] further interest rate cuts in the months ahead” provided that official estimates of inflation stay within the 2–3 per cent target range.
The record high for mortgage stress was recorded in mid-2008, when 35.6 per cent of mortgage holders were considered to be in stress.
Since the RBA began raising interest rates in May 2022, the number of Australians ‘At Risk’ of mortgage stress has risen by 826,000.
The number of Australians now considered ‘Extremely At Risk’ stands at 1,043,000 (18.9 per cent of mortgage holders), a figure that is significantly higher than the long-term average of 14.6 per cent over the past 10 years.
[RELATED: RBA not committed to further rate reductions]
