Risk of mortgage stress up again in December after Reserve Bank again decided not to cut interest rates

New research from Roy Morgan shows 27.9% of mortgage holders are now ‘At Risk’ of ‘mortgage stress’. The research was conducted in the three months to December 2024 and represents a second straight monthly increase since October but is still 2.4% lower than the June figures prior to the Stage 3 tax cuts that increased household income for Australians.
The share of mortgage holders ‘At Risk’ of ‘mortgage stress’ in December (27.9% of mortgage holders) is the highest since September 2024. After the introduction of the Stage 3 tax cuts in July 2024 the share of mortgage holders ‘At Risk’ fell for four straight months until October but has now increased for two straight months after the Reserve Bank left interest rates unchanged in both November and December.
The record high of 35.6% of mortgage holders in mortgage stress was reached in mid-2008.
788,000 more ‘At Risk’ of mortgage stress more than two years after interest rate increases began
The number of Australians ‘At Risk’ of mortgage stress has increased by 788,000 since May 2022 when the RBA began a cycle of interest rate increases. Official interest rates are now at 4.35%, the highest interest rates have been since December 2011, over a decade ago.
The number of Australians considered ‘Extremely At Risk’, is now numbered at 973,000 (17.4% of mortgage holders) which is significantly above the long-term average over the last 10 years of 14.6%.
Mortgage Stress – % of Owner-Occupied Mortgage-Holders

Base: Australians 14+ with owner occupied home loan.
Mortgages ‘At Risk’ will drop in February and March if the RBA drops interest rates in February
Due to the decline in inflation in recent months Roy Morgan has modelled the impact of a potential RBA interest rate decrease in February 2025 of +0.25% to 4.1%.
In December, 27.9% of mortgage holders, 1,595,000, were considered ‘At Risk’ and this figure is projected to decrease by 26,000 in February 2025 to 1,569,000 (27.4% of mortgage holders, down 0.5% points) if the Reserve Bank drops interest rates by +0.25% to 4.10% at its February meeting.
Looking forward, the share of mortgage holders considered ‘At Risk’ will drop further in March, down an additional 27,000 to 1,542,000 in March 2025, equivalent to 26.9% of mortgage holders. This represents a drop of 1% point (down 53,000) from the current figures for December 2024.
Mortgage Risk projections based on an interest rate decrease of +0.25% to 4.10% in February

Base: Australians 14+ with owner occupied home loan.
How are mortgage holders considered ‘At Risk’ or ‘Extremely At Risk’ determined?
Roy Morgan considers the risk of ‘mortgage stress’ among Mortgage holders in two ways:
Mortgage holders are considered ‘At Risk’[1] if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending.
Mortgage holders are considered ‘Extremely at Risk’[2] if even the ‘interest only’ is over a certain proportion of household income.
Unemployment is the key factor which has the largest impact on income and mortgage stress
It is worth understanding that Roy Morgan uses a conservative forecasting model, essentially assuming all other factors apart from interest rates remain the same.
The latest Roy Morgan unemployment estimates show over one-in-five Australian workers are either unemployed or under-employed – 3,218,000 (20.3% of the workforce) – the highest level of overall unemployment or under-employment for over four years since August 2020; (In December Australian unemployment increased to 9.7% as overall employment dropped by 150,000).
Although all eyes will be on the Reserve Bank’s interest rate decision in February, which has large implications for next year’s Federal Election, the fact remains the greatest impact on an individual, or household’s, ability to pay their mortgage is not interest rates, it’s if they lose their job or main source of income.
Michele Levine, CEO Roy Morgan, says mortgage stress increased for a second straight month in December with 27.9% of Australians with a mortgage now considered ‘At Risk’:
“The latest Roy Morgan data shows 1,595,000 Australians were ‘At Risk’ of mortgage stress in December 2024. The share of mortgage holders ‘At Risk’ (27.9%, up 1.1% points from November 2024) has increased for a second straight month.
“After decreasing for four straight months following the introduction of the Stage 3 tax cuts, mortgage stress has increased during both November and December after the Reserve Bank (RBA) decided to leave interest rates unchanged during each of these months.
“The figures for December 2024 represent an increase of 788,000 considered ‘At Risk’ since the RBA began raising interest rates in May 2022. The estimates take into account 13 interest rate increases which raised official rates by a total of 4.25% points to 4.35%.
“The latest ABS quarterly inflation estimates for December 2024 showed annual inflation at 2.4% – down 0.4% points from September 2024. This is the second straight quarter the official inflation estimates have been within the RBA’s preferred target range of 2-3%. On the monthly measure inflation has averaged an even lower 2.3% from August – December 2024.
“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 December 2024 was still just above the desired target range at 3.2%.
“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% to 4.1%. If the RBA cuts interest rates by +0.25% in mid-February the number of mortgage holders considered ‘At Risk’ of mortgage stress would decline to 1,542,000 (26.9% of mortgage holders) by March 2024, a fall of 53,000 on current figures.
“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.
“The employment market has been strong over the last two years (the latest Roy Morgan estimates show 708,000 new jobs created compared to two years ago) and this has provided support to household incomes which have helped to moderate levels of mortgage stress over the last year.”
These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year including over 10,000 owner-occupied mortgage-holders.
To learn more about Roy Morgan’s mortgage data, call (+61) (3) 9224 5309 or email askroymorgan@roymorgan.com. Please click on this link to the Roy Morgan Online Store.
About Roy Morgan
Roy Morgan is Australia’s largest independent Australian research company, with offices in each state, as well as in the U.S. and U.K. A full-service research organisation, Roy Morgan has over 80 years’ experience collecting objective, independent information on consumers.
[1] "At Risk" is based on those paying more than a certain proportion of their after-tax household income (25% to 45% depending on income and spending) into their home loan, based on the appropriate Standard Variable Rate reported by the RBA and the amount they initially borrowed.
[2] "Extremely at Risk" is also based on those paying more than a certain proportion of their after-tax household income (25% to 45% depending on income and spending) into their home loan, based on the Standard Variable Rate set by the RBA and the amount now outstanding on their home loan.
Margin of Error
The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.
Sample Size | Percentage Estimate |
40% – 60% | 25% or 75% | 10% or 90% | 5% or 95% | |
1,000 | ±3.0 | ±2.7 | ±1.9 | ±1.3 |
5,000 | ±1.4 | ±1.2 | ±0.8 | ±0.6 |
7,500 | ±1.1 | ±1.0 | ±0.7 | ±0.5 |
10,000 | ±1.0 | ±0.9 | ±0.6 | ±0.4 |
20,000 | ±0.7 | ±0.6 | ±0.4 | ±0.3 |
50,000 | ±0.4 | ±0.4 | ±0.3 | ±0.2 |