The share of Australian mortgage holders considered at risk of mortgage stress climbed to 29% in May, according to new data from Roy Morgan — the fourth consecutive monthly increase, and the highest level since the Reserve Bank began cutting rates in mid-2025. The figure is equivalent to 1,538,000 people, up 65,000 on April and 100,000 higher than a year ago. The increase follows the Reserve Bank's decision to raise the official cash rate by 0.25 percentage points to 4.35% in early May — the third hike of 2026, after increases in February and March. The RBA subsequently left rates on hold at its June meeting.
The cumulative cost of those three moves is tangible for borrowers. According to Canstar, the three 2026 hikes have added approximately $272 per month to repayments on a $600,000 loan — roughly $3,265 in extra annual repayments if rates now stay on hold. Of particular concern is the proportion of borrowers classified as "extremely at risk" — those for whom even interest-only repayments would consume an unsustainable share of household income. That cohort now stands at 1,084,000, or 20.4% of mortgage holders, well above the two-decade long-term average of 16.4%.
What the numbers could look like by August.
Roy Morgan has modelled the potential impact of a further 0.25 percentage point rate rise at the RBA's August meeting, which would lift the cash rate to 4.6% — the highest level in nearly 15 years.
Under that scenario, the share of mortgage holders at risk would rise to 30.2%, affecting 1,600,000 people — up 62,000 from current levels. Even without an August increase, the May rise is expected to continue flowing through, pushing the at-risk share to an estimated 29.5% by July.
Levine said the inflation picture offered some tentative relief.
The stress figures also have a direct implication for broker clients considering refinancing. Canstar analysis shows the cumulative reduction in borrowing capacity from the 2026 hikes so far is roughly $25,000 for a single average-income borrower and $49,000 for a couple — with a potential fourth hike pushing those figures to $37,000 and $73,000 respectively.
Employment remains the critical variable
Roy Morgan's May employment estimates show the workforce has contracted for three consecutive months, while overall unemployment and underemployment stands at more than 3.2 million workers — 20.2% of the workforce. At the same time, Levine noted that nearly one million jobs have been created since May 2022, providing an underlying buffer that has helped moderate stress levels relative to the rate environment.
The 20.4% of mortgage holders now classified as extremely at risk — well above the long-term average of 16.4% — is a reminder that for a significant cohort, the pressure has moved beyond precautionary. The all-time stress peak of 35.6% was recorded during the Global Financial Crisis in mid-2008; current conditions remain well short of that threshold, though the employment trend bears watching.