Mortgage stress hits 18-year high — 32.5% at risk before the September RBA decision

Repayments feeling tight before the 29 September RBA? Rate review enquiry · Refinance playground · Hardship rights · Apply pathway

About 32.5% of Australian owner-occupier mortgage holders — roughly 1.79 million people — were classified by Roy Morgan as at risk of mortgage stress in July 2026. That is up 2.2 percentage points from June, up 180,000 people in a single month, and the highest reading in 18 years — since the Global Financial Crisis period in September 2008, according to Roy Morgan's release published 1 September 2026.

It is the sixth consecutive monthly rise. Roy Morgan also puts 22% of mortgage holders — about 1.21 million — in the tighter extremely at risk band, well above the two-decade average of 16.4%.

The Reserve Bank left the cash rate at 4.35% on 12 August 2026 but meets again on 29 September 2026 with further hikes still possible. Roy Morgan modelled a 0.25 percentage point move to 4.60% pushing the at-risk share toward 33.1% by October.

This guide explains what Roy Morgan's measure means, how it connects to this week's property downturn data, and what to check on your loan in the 27 days before the Board decides — without treating a survey share as a reason to panic or refinance on impulse.

General information only — not personal financial advice.

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Roy Morgan July 2026 — the numbers at a glance

Roy Morgan CEO Michele Levine said mortgage stress has risen six months in a row, alongside three RBA rate hikes in 2026, softening housing prices in key markets, and weaker full-time employment — down 228,000 from January 2026 to July on Roy Morgan's labour estimates.

Those forces overlap. Higher repayments after rate hikes meet softer household income growth and, for some owners, falling paper equity as Cotality's August Home Value Index showed broad capital-city declines.

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What "mortgage stress" means in Roy Morgan's model

Roy Morgan's at risk band is not the same as:

• missing a repayment
• being in formal hardship
• receiving a default notice
• failing a lender's internal stress test

It is a research classification. Mortgage holders are considered at risk when repayments exceed a set share of after-tax household income — between roughly 25% and 45% depending on income and spending patterns, using the RBA standard variable rate and the amount initially borrowed.

Extremely at risk uses a tighter test: even interest-only repayments on the current balance would exceed that income share.

Roy Morgan's September/October scenarios assume rates move but other factors stay constant — a conservative modelling choice. Your actual budget may look different. The value is national context, not a label for your kitchen table.

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September RBA — what Roy Morgan modelled if rates rise again

The Board's next meeting runs 28–29 September 2026, with the decision and media release at 2:30pm AEST on 29 September, per the RBA calendar.

Roy Morgan modelled a +0.25% move to 4.60%:

A 0.25% hike alone adds a modest share on Roy Morgan's model — +0.6 pp to October. The bigger story is the cumulative effect of three 2026 hikes already in the system, plus labour-market softness.

Major bank economists are not unanimous:

Treat every bank forecast as conditional commentary — not what the Board will do. The August 2026 Statement on Monetary Policy said inflation is not expected near the target midpoint until around late 2027, with upside risks and willingness to hike further if those risks materialise.

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Property prices falling — why that does not fix your repayment

This week Cotality reported a 0.9% national Home Value Index fall in August and 93% of capital-city suburbs recording a decline through winter. Sydney sits 7.1% below its February peak.

Falling values matter for LVR on refinance, equity drawdowns, and buyer confidence. They do not automatically reduce your existing-customer variable rate.

Property values and lender pricing grids move on different schedules. You can own a home worth less on paper while paying the same — or higher — rate than a year ago. That is why the property downturn playbook and this stress piece belong together: one explains values, this one explains repayments and serviceability.

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Lending is slowing — competition for remaining borrowers

Separate data this week shows the mortgage market cooling:

Fewer new loans does not mean your lender will cut your rate out of charity. It can mean sharper acquisition pricing for switchers and retention desks under pressure to keep existing books — if you ask in writing and compare properly.

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What to check on your loan before 29 September

This is a planning checklist — not a instruction to refinance, fix, or sell.

1. Write down what you actually pay

From internet banking, confirm:

• current interest rate (headline and comparison if shown)
• monthly repayment (contractual minimum)
• remaining term
• offset or redraw balance
• fixed-rate expiry date if applicable

2. Stress-test 4.35% → 4.60%

Roy Morgan's scenario is a useful planning number. On a $600,000 balance over 25 years, a 0.25% rate rise adds roughly $90–$95 per month on a principal-and-interest loan — illustrative only; your product and lender matter.

If that step-up breaks your budget, the conversation is retention, structure, or hardship — not ignoring the calendar.

3. Request written retention pricing

Ask your lender what they will offer an existing customer in writing. Verbal promises on the phone are hard to compare against a competitor's fact sheet.

See the retention discount email template if you want wording.

4. Compare term-for-term refinance

If switching is on your radar, compare on the same remaining years — not a headline rate that resets you to 30 years. Nearly half of refinancers have extended their term without realising it, according to industry survey data we covered earlier this year.

Run numbers in the refinance playground and the refinance break-even guide.

5. Know hardship rights before you miss a payment

Australian credit law gives borrowers a right to request a hardship variation when they reasonably expect they cannot meet obligations. Early contact usually leaves more options than waiting until arrears appear.

See the hardship rights guide. General information only — not legal advice.

6. Investors — separate crunch from owner-occupiers

Investor lending grew just 0.1% in July. If you carry interest-only periods expiring, rent shading tightening, or 2027 tax-rule changes, those files need a different review path. See interest-only expiry and negative gearing from July 2027.

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Who should act vs who should wait

None of this guarantees approval, savings, or a particular Board outcome.

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How this fits your wider September reading list

Three data drops landed in the same week:

1. Roy Morgan — mortgage stress at an 18-year high (this article)
2. Cotality — property downturn broadening to 93% of capital-city suburbs (playbook here)
3. APRA / bank books — mortgage growth at a three-year low

Together they describe a market where repayments are elevated, values are softening, and new lending is thin — while the RBA still has hikes on the table.

If you want a second read on your rate, remaining term, and retention versus switch before 29 September, speak with a broker via our refinancing service or home loans service. Bring a recent statement if you have one. Approval is never guaranteed.

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FAQ

Is 32.5% mortgage stress a record?

It is the highest in 18 years on Roy Morgan's series — not the all-time peak. The record is 35.6% in May 2008, when the cash rate reached 7.25%.

Did the August RBA hold mean mortgage stress stopped rising?

No. Roy Morgan's July reading was published after the August hold. Stress reflects repayment burden and income, not the single decision on 12 August.

Where should I read the primary sources?

• Roy Morgan July 2026: roymorgan.com/findings/10318
• RBA cash rate and calendar: rba.gov.au
• Property downturn context: September Cotality playbook
• July CPI and inflation: July CPI mortgage checklist

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General information only — not financial product advice, tax advice, or a recommendation to buy, sell, or refinance. Roy Morgan classifications are research estimates, not personal diagnoses. Credit assistance is available only after a formal enquiry with Azure Home Loans Pty Ltd (Australian Credit Licence 389328).