1,718,000. That is how many Australians Roy Morgan estimated were at risk of mortgage stress in the three months to August 2026: 32.3% of people with a home loan, or about 1 in 3. The RBA has raised the cash rate four times in 2026, to 4.60% since 30 September, and lenders passed the latest rise on in full from 8–9 October. On a $600,000 loan with 25 years left, the four rises add about $364 a month (Canstar). As at 19 October 2026, the next RBA decisions are due on 3 November and 8 December.
If you are struggling with repayments, call your lender before you miss a payment. Free, independent help is also available.
What Is Mortgage Stress?
Mortgage stress usually means home loan repayments take more than 30% of your household income before tax. It does not mean you are about to lose your home, but it leaves little room if something goes wrong. Roy Morgan uses its own measure: repayments above a set share of after-tax income, between 25% and 45% depending on income and spending.
To see how much room you have before the next rate move, the RBA rate change calculator shows what a rise or cut does to your repayment in dollars.
Why So Many Households Are Under Pressure in 2026
- Four rate rises. The RBA raised the cash rate in February, March, May and September 2026, from 3.60% to 4.60%. Each rise adds about $91 a month to a $600,000 loan with 25 years left (Canstar).
- Living costs. Prices rose 4.0% in the year to August 2026 (ABS).
- Tighter lending. Since 1 February 2026, APRA has limited lending to borrowers whose debts are 6 or more times their income to 20% of each bank's new loans, which can make a new loan harder to get.
Roy Morgan says losing a job or your main source of income has a bigger effect on whether you can pay the mortgage than interest rates do.
Step 1: Ask Your Lender for Hardship Help
If you can't keep up your repayments, you can ask your lender for a hardship variation. This is a change to your loan, or a pause or cut in your repayments for a while. Every lender has a hardship team (Moneysmart).
How to ask:
- Call or write to your lender's hardship team. Say you want to change your loan repayments because you are in financial hardship.
- Give your loan details and explain why you are having trouble paying, such as a job loss, illness or a drop in income.
- Say how long you expect the problem to last and what you can afford to pay.
What your lender has to do: it must write to you within 21 days with its decision. If it asks for more information, the 21 days start when you send it. If it says no, it must give you a reason.
What you might be offered:
- Pausing or reducing repayments for a few months
- Interest-only repayments for a period
- A longer loan term, which lowers each repayment
Interest keeps adding up while repayments are paused or reduced, so the loan can cost more overall. Agree to an amount you can keep paying.
Your credit report: a hardship arrangement is noted on your credit report for 12 months, but it can't be used to work out your credit score. A missed repayment can lower your score (CreditSmart).
If Your Lender Says No
Ask for the reason in writing. If you can't reach an agreement, you can complain to the Australian Financial Complaints Authority (AFCA). It offers free, independent dispute resolution.
Step 2: Call the National Debt Helpline
The National Debt Helpline (1800 007 007) connects you with free, confidential financial counsellors. They can help you work out a budget and a plan, contact your lender with you, and explain your rights as a borrower.
Step 3: Cut Your Repayments Where You Can
These steps help most while you are still keeping up. Each is covered in detail in 5 Ways to Cut Your Mortgage Without Refinancing.
- Ask for a lower rate. Call your lender's retention team with a competitor's rate. How to negotiate.
- Use an offset account. At 6.5%, $20,000 in offset saves about $1,300 a year. How offset works.
- Refinance if the gap is 0.5% or more. Each 0.5% off a $600,000 loan saves about $3,000 a year in interest. When refinancing pays, and the current cashback offers.
- Clear high-interest debt. Rolling credit card debt into your home loan only helps if you close the cards afterwards.
- Review your insurance. Compare home, car and income protection premiums before each renewal.
Our Loan Advisor models P&I vs IO repayments across different rates — including the APRA serviceability buffer.
Am I Paying Too Much? Check Now → Free · No account needed · APRA-compliant
If Selling Is on the Table
Selling is a last resort. If it comes to that, it's better to sell your home yourself than have your lender take possession and sell it (Moneysmart). A lender selling the home does not clear any amount the sale doesn't cover.
Before you list, check whether a sale clears the loan. Agent's commission, marketing and legal fees come out of the sale price before the loan is repaid. The Velofy Property Sale Profit Calculator shows what you would walk away with. Talk to a financial counsellor before you decide.
Your Mortgage Stress Action Checklist
| Step | When | Who to Contact |
|---|---|---|
| Ask for a hardship variation | Before you miss a repayment | Your lender's hardship team |
| Get free financial counselling | As soon as repayments feel hard | National Debt Helpline, 1800 007 007 |
| Complain if the lender says no | After a refusal you can't resolve | AFCA |
| Ask for a lower rate | This week | Your lender's retention team |
| Compare refinancing | If your rate is 0.5% or more above new-customer rates | Comparison sites or a mortgage broker |
| Check what a sale would leave you | Before you list | Property Sale Profit Calculator and a financial counsellor |
Our Loan Advisor shows your P&I and IO repayments, APRA-assessed rate, and LMI threshold in 60 seconds.
See My Exact Repayments — Free → Free · No account needed · APRA-compliantAustralia's most trusted money guide. The emergency bucket strategy is designed exactly for mortgage stress situations — covers how to renegotiate rates and buy breathing room.
Shop on Amazon AU →Monthly budget pages, income/expense tracker, and a 3-month cash-flow snapshot — the foundation for identifying where repayments can be freed up.
Shop on Amazon AU →Frequently Asked Questions
What is mortgage stress in Australia?
It's usually defined as home loan repayments taking more than 30% of a household's income before tax. Roy Morgan, which uses its own measure, estimated 1,718,000 Australians, about 1 in 3 people with a home loan (32.3%), were at risk of mortgage stress in the three months to August 2026.
Can I refinance my home loan if I'm under mortgage stress?
Usually, yes, as long as the new lender is satisfied you can afford the loan. Work out your total debt divided by your income before tax first: since 1 February 2026, APRA has limited new lending to borrowers at 6 or more times their income to 20% of each bank's new home loans, so a high ratio can make a new loan harder to get. Each 0.5% off your rate saves about $3,000 a year in interest on a $600,000 loan. If you are already behind on repayments, talk to your lender's hardship team first.
What is the APRA DTI cap and how does it affect me?
Since 1 February 2026, no more than 20% of a bank's new home loans can go to borrowers whose total debt is 6 or more times their income before tax. The limit applies to owner-occupier and investor loans separately. If your debts are high compared with your income, a new loan may be harder to get.
How much can an offset account save me on my mortgage?
Every dollar in an offset account comes off the balance you're charged interest on. At a 6.5% rate, $20,000 in offset saves about $1,300 a year. The saving grows with the balance and with your rate, and it isn't taxed the way savings interest is.
What happens if my lender says no to a hardship request?
Your lender must give you a reason. If you can't reach an agreement, you can complain to the Australian Financial Complaints Authority (AFCA), which offers free, independent dispute resolution. A financial counsellor from the National Debt Helpline (1800 007 007) can help you prepare.
Where can I get free help with mortgage stress in Australia?
The National Debt Helpline (1800 007 007) offers free, confidential financial counselling. Moneysmart (moneysmart.gov.au) explains how to ask your lender for hardship help. Your lender must reply to a hardship request in writing within 21 days, so contact it early.
Sources
- ASIC Moneysmart — Problems Paying Your Mortgage
- National Debt Helpline — 1800 007 007
- Australian Financial Complaints Authority (AFCA)
- CreditSmart — Financial Hardship and Your Credit Report
- Roy Morgan — Mortgage Stress Risk, August 2026 (released 29 September 2026)
- Roy Morgan — Mortgage Stress Risk, July 2026
- Canstar — RBA September Rate Hike (29 September 2026)
- ABS — Monthly Consumer Price Index Indicator
- Mortgage Navigators — Serviceability in 2026