Australia Mortgage Stress 2026 — The RBA Has Now Hiked Three Times. Here’s How Many Households Are at Risk.
The RBA cut interest rates three times in 2025, from 4.35 per cent down to 3.6 per cent. Hundreds of thousands of Australian mortgage holders finally caught a break.
Then in February 2026, the RBA hiked again. Then March. Then May. The cash rate now sits at 4.35 per cent — and the number of households in mortgage stress has hit the level that was only a forecast six weeks ago.
The Numbers Right Now
According to Roy Morgan Research, 24.9 per cent of Australian mortgage holders — approximately 1.317 million people — were considered “at risk” of mortgage stress in February 2026. That figure rose after the March hike to an estimated 26.6 per cent, or 1.41 million people.
Following the third hike on 5 May 2026, the estimated figure has now reached 30.3 per cent — approximately 1.6 million Australian mortgage holders at risk. That is roughly 1 in 3.
A further 789,000 households were classified as “extremely at risk” as of March — meaning even paying interest-only would consume too large a share of their income. With a third hike now confirmed, that figure is expected to rise further.
How Much More Are Households Paying?
Canstar modelling based on Westpac forecasts puts the extra monthly cost of the 2026 rate hikes at:
| Loan size | Extra monthly repayment |
|---|---|
| $600,000 | +$457/month |
| $800,000 | +$609/month |
| $1,000,000 | +$762/month |
These figures from Canstar modelling assumed three hikes across 2026. All three — February, March and May — have now occurred. If Westpac’s forecast of further hikes in June and August materialises, mortgage stress would push materially higher again.
Why Is This Happening Now?
Inflation was supposed to keep falling. It hit a low of 1.9 per cent in June 2025 — comfortably within the RBA’s 2 to 3 per cent target. Rate cuts followed.
But then inflation doubled. By January 2026, the ABS recorded headline CPI at 3.8 per cent — driven by rising energy costs, food inflation, and the Middle East conflict pushing petrol prices sharply higher. The RBA had no choice but to reverse course.
For mortgage holders, that reversal wiped out months of relief in two board meetings.
The Biggest Risk Is Not the Rate — It’s Your Job
Roy Morgan’s analysis makes one thing clear: interest rates are not the primary driver of mortgage stress. Job loss is.
Over one in five Australian workers are currently unemployed or underemployed — approximately 3.34 million people. For a household already stretched thin by a higher mortgage rate, losing one income source is what tips a tight budget into genuine crisis.
If you are feeling the pressure, contact your lender before you miss a payment. Lenders are required by law to offer hardship arrangements. The National Debt Helpline (1800 007 007) provides free financial counselling. And for anyone questioning whether renting versus owning still makes financial sense in 2026, see our rent vs house prices data.
What Could Change
The RBA has delivered three consecutive hikes and explicitly left the door open to more, stating it will “do what it considers necessary” to return inflation to target. Headline inflation hit 4.6 per cent in March — the highest since September 2023.
Westpac is forecasting two further hikes in June and August, which would take the cash rate to 4.85 per cent. ANZ, CBA and NAB are holding a pause forecast, pending the April CPI data due in late May.
The honest position for mortgage holders right now: plan as if rates stay at 4.35 per cent or higher, and treat any pause as breathing room — not a signal that cuts are coming.
For the full picture of what rising rates mean for housing costs, see our house prices guide and our rent prices guide.
General information only. Source: Roy Morgan Research, RBA, ABS, Canstar. Always seek financial advice for your specific situation.
