Mortgage Stress Climbs to Four-Year High, 1.5 Million at Risk

Roy Morgan's May data shows 1.54 million mortgage holders are now at risk — a four-year high — and an August RBA hike could push that figure to 1.6 million.

The share of Australian mortgage holders considered at risk of mortgage stress has climbed to 29% — the highest level since the Reserve Bank began cutting rates in mid-2025 — and a further hike in August could push that figure above 30% for the first time since the current tightening cycle began.

New data from Roy Morgan, reported by Australian Broker, shows 1,538,000 people are currently classified as at risk of mortgage stress as of May 2026. That number increased by 65,000 in a single month between April and May, and sits 100,000 higher than a year ago. May marks the fourth consecutive monthly rise in the stress rate — the longest unbroken run since the current cycle turned in early 2026.

Three 2026 hikes have already stretched household budgets

The pressure on mortgage holders is the direct result of three rate increases the RBA delivered this year — in February, March, and May — each of 0.25 percentage points, which together lifted the official cash rate to 4.35%. The RBA held rates at its June meeting, but with May trimmed mean inflation coming in above expectations, the August meeting is shaping up as a live call.

Roy Morgan CEO Michele Levine placed the stress figures within a broader picture of household financial strain. "Mortgage stress is just one indicator of the pressure Australians are under — mortgage stress is up four months in a row, interest rates have increased three times already this year, housing prices are coming down in key markets, and the Australian workforce has shrunk for three straight months," she said.

The cohort classified as "extremely at risk" — those for whom even interest-only repayments would consume an unsustainable share of household income — now stands at 1,084,000, or 20.4% of all mortgage holders. That sits well above the two-decade long-term average of 16.4%. For context, the all-time stress peak of 35.6% was recorded during the Global Financial Crisis in mid-2008; current conditions remain substantially below that threshold, but the pace of deterioration over four consecutive months is notable.

What an August hike would mean for the stress numbers

Roy Morgan has modelled the impact of a further 25-basis-point increase at the 12 August meeting. Under that scenario, the cash rate would rise to 4.60% — the highest level in nearly 15 years — and the at-risk share would climb to 30.2%, equivalent to 1,600,000 people, an additional 62,000 from current levels.

Even in the absence of an August hike, Roy Morgan projects the stress rate will reach approximately 29.5% by July as the full impact of the May increase continues to flow through to household repayments.

Employment is the key variable to watch alongside the rate outlook. Levine was explicit: "The largest impact on whether a borrower falls into the 'at risk' category is related to household income — which is directly related to employment." Roy Morgan's May employment estimates show the workforce has contracted for three consecutive months, with total unemployment and underemployment above 3.2 million workers, representing 20.2% of the workforce. Nearly one million jobs have been created since May 2022, providing an underlying buffer, but the current employment trend warrants close attention.

Levine offered a note of tentative relief on inflation, citing ABS data that showed consumer prices for the 12 months to April 2026 at 4.2%, down 0.4 percentage points from March 2026's reading of 4.6%, partly reflecting easing tensions in the Middle East.

What stressed borrowers can do now

If your repayments have been tightening every month this year and an August hike would put you in a difficult position, the time to act is now — not after the August decision.

Contact your lender's hardship team early if repayments are already unmanageable. Lenders are required to consider genuine hardship applications, and options including repayment pauses or loan restructuring are almost always more accessible when requested before default occurs.

More broadly, check whether your current interest rate is still competitive. Many borrowers who have stayed with the same lender through multiple rate rises this year are paying a rate noticeably higher than what is available for comparable loans in the current market. Refinancing to a lower rate can reduce your monthly cash flow pressure without changing your outstanding loan balance.

Use the [repayment calculator](/calculators/repayment) to model your current repayments against a potential August rise. Then use the [refinance savings calculator](/calculators/refinance-savings) to see what switching to a lower rate could save you each month. Even a modest reduction on a typical loan balance adds up to meaningful savings over a year.

If your financial position has become more complex — multiple debts, a change in income, or equity you haven't reassessed in some time — a broker can map your options across a wider field of lenders and structures than you would find approaching a single institution directly.

[Read the full Roy Morgan analysis via Australian Broker.](https://www.brokernews.com.au/news/breaking-news/mortgage-stress-hits-fouryear-high--1-6-million-at-risk-if-rba-hikes-again-in-august-289561.aspx)