Further drop likely if interest rates fall again, says Roy Morgan
The proportion of Australian mortgage holders considered at risk of mortgage stress fell for a second month in March, according to new data from Roy Morgan.
The drop follows the Reserve Bank of Australia’s (RBA) decision to cut the cash rate by 0.25 percentage points to 4.1% in February – its first reduction in more than four years.
Roy Morgan’s research, conducted over the three months to March 2025, shows 26.5% of mortgage holders were “at risk”, a decrease of 1.2 percentage points from the previous month. This figure is the lowest recorded since June 2023, when rates also sat at 4.1%. Mortgage stress levels peaked at 35.6% during the global financial crisis in mid-2008.
Since the RBA started lifting rates in May 2022, an additional 644,000 borrowers have fallen into the “at risk” category. The number of those classified as “extremely at risk” – where even interest-only repayments strain household income – has reached 990,000, or 18.5% of mortgage holders. This remains well above the decade-long average of 14.7%.
Roy Morgan’s modelling suggests that mortgage stress could ease further if the RBA cuts rates again by 0.25 percentage points in May. If the cash rate falls to 3.85%, the share of mortgage holders “at risk” is projected to decline to 26.2% by May and 26% by June.
In March, 1.451 million mortgage holders were classed as “at risk”. This figure could drop to 1.424 million by June if another cut is delivered, representing a decline of 27,000 borrowers.
Unemployment remains the key driver influencing mortgage stress, as job losses directly impact household income.
“After increasing for three straight months from October, the RBA’s decision to reduce interest rates by 0.25% to 4.1% in mid-February has now led to back-to-back monthly reductions in mortgage stress which is now at its lowest since June 2023 – when interest rates were first increased to 4.1%,” said Michele Levine (pictured above), chief executive of Roy Morgan.
“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 over 900,000 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.”
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