Risk of mortgage stress unchanged in April, but set to fall in May after the Reserve Bank cuts interest rates
New research from Roy Morgan shows 26.5% of mortgage holders ‘At Risk’ of ‘mortgage stress’ in the three months to April 2025, unchanged from a month earlier. These figures relate to the period before last week’s interest rate cut which is set to reduce mortgage stress going forward.
The share of mortgage holders ‘At Risk’ of ‘mortgage stress’ in April (26.5% of mortgage holders) is set to fall by 0.2% points in May to 26.3% of mortgage holders after the Reserve Bank cut interest rates by 0.25% to 3.85% last week – the lowest official interest rates have been for two years since May 2023.
The record high of 35.6% of mortgage holders in mortgage stress was reached in mid-2008.
622,000 more ‘At Risk’ of mortgage stress three years after interest rate increases began
The number of Australians ‘At Risk’ of mortgage stress has increased by 622,000 since May 2022 when the RBA began a cycle of interest rate increases. Official interest rates are now at 3.85% after the RBA cut interest rates in mid-February and again earlier this week, by a total of 0.5%.
The number of Australians considered ‘Extremely At Risk’, is now numbered at 955,000 (18.0% of mortgage holders) which is clearly above the long-term average over the last 10 years of 14.7%.
Mortgage Stress – % of Owner-Occupied Mortgage-Holders
Source: Roy Morgan Single Source (Australia), average interviews per 3 month period April 2007 – April 2025, n=2,863.
Base: Australians 14+ with owner occupied home loan.
Mortgages ‘At Risk’ set to drop further if the Reserve Bank cuts interest rates in July
Due to the decline in inflation over the last year the Reserve Bank has now cut interest rates in February and again last week by a total of 0.5% to 3.85%. Roy Morgan has modelled the impact of an additional RBA interest rate decrease in early July 2025 by +0.25% to 3.6%.
In April, 26.5% of mortgage holders, 1,429,000, were considered ‘At Risk’ and this figure is projected to decrease by 13,000 in May 2025 to 1,416,000 (26.3% of mortgage holders, down 0.3% points) following the Reserve Bank decision to cut interest rates last week by +0.25% to 3.85%.
As the full impact of the latest interest rate cut flows through, the share of mortgage holders considered ‘At Risk’ is set to drop to 26.0% of mortgage holders in June, equivalent to 1,402,000 mortgage holders.
An additional interest rate cut in July of 0.25% to 3.6% will have a significant impact on mortgage stress and reduce the share of mortgage holders considered ‘At Risk’ to 24.7% of mortgage holders, equivalent to 1,330,000 mortgage holders – a drop of 1.8% points, or 99,000 mortgage holders, from current figures.
Mortgage Risk projections based on an interest rate decreases of +0.25% in July to 3.6%
Source: Roy Morgan Single Source (Australia), February – April 2025, n=4,501.
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 – 3,252,000 (20.4% of the workforce); (In April Australian unemployment increased to 11.2% driven primarily by more people joining the workforce).
Although the Reserve Bank’s decision to cut interest rates in February and May has clearly had a positive impact and helped lower mortgage stress, the fact remains the greatest impact on an individual, or household’s, ability to pay the mortgage is not interest rates, it’s if they lose their job or main source of income.
Michele Levine, CEO Roy Morgan, says the impact of the Reserve Bank’s (RBA) first interest rate cut in February is still flowing through and the second interest rate cut last week, by 0.25% to 3.85%, is set to reduce mortgage stress to its lowest for over two years since early 2023:
“The latest Roy Morgan data shows 1,429,000 Australians were ‘At Risk’ of mortgage stress in April 2025 equivalent to 26.5% of mortgage holders ‘At Risk’ (unchanged from March 2025).
“After increasing for three straight months from October, the RBA’s decision to cut interest rates by 0.25% to 4.1% in mid-February has resulted in a significant reduction in mortgage stress – down by 3.4% points (down 204,000 mortgage holders) as the interest rate cut flows through the economy.
‘The RBA’s decision to cut interest rates by 0.25% last week to 3.85% – now the lowest official interest rates have been since May 2023 – is set to reduce mortgage stress further in May and June.
“Roy Morgan has modelled last week’s interest rate cut on the level of mortgage stress for both May and June, and this latest cut is set to reduce those Australians ‘At Risk’ of mortgage stress to 26.0% of mortgage holders (1,402,000) by June.
“The RBA next meets to decide on interest rates in early July, and an additional standard interest rate cut of 0.25% to 3.6% would result in a significant reduction in mortgage stress – down to 24.7% of mortgage holders – which would be the lowest level since January 2023.
“However, despite the RBA cutting interest rates this year, mortgage stress is still significantly higher than before the RBA began raising interest rates in May 2022. There are over 600,000 more mortgage holders ‘At Risk’ of mortgage stress today than there were in May 2022, and even an interest rate cut in July will still leave this figure elevated by around 520,000.
“The good news is that the latest ABS monthly inflation estimates for March 2025 showed annual inflation at 2.4%, just under the mid-point of the RBA’s preferred target range of 2-3%. This is the eighth straight month the official inflation estimates have been within the RBA’s preferred target range of 2-3% and is the driving factor behind the RBA’s decision to lower interest rates.
“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 three years (the latest Roy Morgan estimates show over 1 million new jobs created compared to April 2022) 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 |
