Mortgage stress at lowest level since early 2023

Good news for borrowers: pressure on home-loan holders is easing. Recent data shows the share of Australians with mortgages classified as “at risk” of stress has dropped to the lowest level we’ve seen since early 2023. While that doesn’t mean all the clouds have gone, it does signal some relief for many households—and that’s worth unpacking so you’re clear on what it means for you.

What’s happening and why

Three important points:

1. Around 25.9 % of mortgage-holders were “at risk” of mortgage stress in the three months to September 2025. That’s down about two percentage points from August 2025, and the lowest share since February 2023—just before the first rate rise in that tightening cycle.

2. What’s driving the improvement? Several factors:

   • Interest-rate relief: The Reserve Bank of Australia’s recent cash-rate cuts have started to flow through to lower mortgage costs.

   • Income support: The Stage 3 tax cuts and stronger wage growth have helped improve household budgets.

   • Employment stability: Data shows job losses and under-employment are now the biggest threats to servicing a mortgage, not just interest rates.

3. The caution flags:

   • While fewer borrowers are “at risk”, the level of extreme stress remains high—some households are still spending a large portion of income on repayments.

   • Lower-income borrowers haven’t seen the same level of relief as higher-income ones.

   • Cost-of-living pressures and higher household expenses continue to offset some of the benefit from lower rates.

What this means for you as a borrower or refinancer

For current homeowners

If you’re already in a home loan, this easing is good news: the overall environment is less strained than it was earlier in the year. That could mean slightly better refinancing opportunities or more breathing room in your budget.

But don’t assume you’re off the hook—maintaining job security, managing other debts and avoiding over-commitment are still essential. If you’re feeling like you’re barely keeping up, now is a great time to speak to a broker about whether refinancing, switching repayment types, or consolidating other debts could make things easier.

For people considering refinancing

As mortgage stress drops, lenders may become a little more confident in assessing new applications—but they’ll still be cautious. Make sure your income documentation is up to date and your budget can handle any rate changes. Talk to your broker about whether this is a good time to lock in a better rate or explore features like an offset account or extra repayments to build flexibility into your loan.

For first-time buyers and investors

The drop in stress levels is a reminder that while conditions are improving, borrowing is still a serious commitment. If you’re buying now, make sure you can manage repayments comfortably even if rates tick up or your income dips.

Investors should also consider that stress levels vary by region—some markets are more resilient than others. Keep an eye on rental yields, vacancy rates and local employment conditions when planning your next move.

What a broker can help you with

If you’d like to take advantage of the easing stress environment—or make sure you’re protected from future risk—here’s what we can look at together:

• Reviewing your current home-loan structure to see if your rate or repayment type is still the best fit

• Assessing your borrowing power under different interest-rate or income scenarios

• Exploring refinancing options, including offset accounts and debt consolidation

• Preparing income and expense documents for new applications or loan switches

• Long-term planning to help you stay confident if rates rise again or your circumstances change

If you’d like me to dig into by-state breakdowns of mortgage stress, or you’re considering refinancing right now and want to know how the easing environment might work in your favour—get in touch. I’m here to help you stay ahead of the market and make sure you’re in the strongest possible position.

Sources:
Roy Morgan (Mortgage Stress Data, Sept 2025); Broker News (2025, Mortgage Stress Falls to Two-Year Low); MacroBusiness (2025, Unemployment not Interest Rates is the Biggest Mortgage Stress Risk); PropertyBuzz (2024, Mortgage Stress Levels Hit 18-Month Low); 9News Finance (2025, Homeowners Facing Higher Mortgage Stress Despite Lower Interest Rates).