Roy Morgan Research
January 27, 2023

‘Mortgage stress’ increases to highest since July 2013; 23.9% of mortgage holders now ‘At Risk’

Topic: Press Release
Finding No: 9148

New research from Roy Morgan shows an estimated 1.1 million mortgage holders (23.9%) were ‘At Risk’ of ‘mortgage stress’ in the three months to December 2022. This period encompassed three interest rate increases of 0.25% taking official interest rates to 3.1% in early December – the highest official interest rates for a decade since December 2012.

For the first time in this cycle of interest rate increases the proportion of mortgage holders now considered ‘At Risk’ of mortgage stress (23.9%) is above the long-term average of 22.8% stretching back to early 2007.

However, despite the sharp increase in the level of mortgage stress during the last year the overall number remains well below the high reached during the Global Financial Crisis in early 2009 of 35.6% (1,455,000 mortgage holders).

Mortgage stress’ dropped to record lows during 2021 as record low interest rates, tens of billions of dollars of Government stimulus, and the measures taken by banks and financial institutions to support borrowers in financial distress combined to reduce the number of mortgage holders considered ‘At Risk’.

The number of mortgage holders considered ‘Extremely At Risk’, has now increased to 666,000 (15.0%) in the three months to December 2022 which is now in line with the long-term average over the last 15 years of 659,000 (15.9%).

Mortgage Stress – Owner-Occupied Mortgage-Holders

Source: Roy Morgan Single Source (Australia), average interviews per 3 month period April 2007 – December 2022, n=2,716.
Base: Australians 14+ with owner occupied home loan.

Mortgage Risk set to increase to over 1.2 million (26.3%) mortgage holders by March 2023

Official RBA interest rates are now at a decade high of 3.1% and following this week’s ABS CPI figure for December 2022 of 7.8% are expected to increase again at the RBA’s next meeting in early February.

Roy Morgan has modelled the impact of two potential RBA interest rate increases of +0.25% in each of the next two months of February (+0.25% to 3.35%) and March (+0.5% to 3.6%).

In December 23.9% of mortgage holders, 1,100,000, were considered ‘At Risk’ and with expected future interest rate increases to come this is set to increase to over 1-in-4 mortgage holders by March 2023.

If the RBA raises interest rates by +0.25% in February to 3.35% there will be 24.7% (up 0.8% points) of mortgage holders, 1,139,000, considered ‘At Risk’ in February 2023 – an increase of 139,000.

If the RBA raises interest rates by a further +0.25% in March to 3.6% there will be 26.3% (up 2.4% points) of mortgage holders, 1,213,000, considered ‘At Risk’ in March 2023– an increase of 213,000.

It is worth understanding that this is a conservative model, essentially assuming all other factors remain the same. And of course we are already seeing an increase in unemployment (Australian unemployment increased to 9.3% in December in line with the usual seasonal trends – January 19, 2023).

The greatest impact on an individual, or household’s, ability to pay their mortgage is not interest rates, it’s if they lose their job or main source of income.

Mortgage Risk at different level of interest rate increases

Source: Roy Morgan Single Source (Australia), Oct - Dec. 2022, n=3,550. Base: Australians 14+ with owner occupied home loan.

How are mortgage holders considered ‘At Risk’ or ‘Extremely At Risk’ determined?

Roy Morgan considers the risk of ‘mortgage stress’ among Mortgage holders in two ways:

Mortgage holders are considered ‘At Risk’[1] if their mortgage repayments are greater than a certain percentage of household income – depending on income and spending.

Mortgage holders are considered ‘Extremely at Risk’[2] if even the ‘interest only’ is over a certain proportion of household income.


[1] "At Risk" is based on those paying more than a certain proportion of their after-tax household income (25% to 45% depending on income and spending) into their home loan, based on the appropriate Standard Variable Rate reported by the RBA and the amount they initially borrowed.

[2] "Extremely at Risk" is also based on those paying more than a certain proportion of their after-tax household income into their home loan, based on the Standard Variable Rate set by the RBA and the amount now outstanding on their home loan.

Michele Levine, CEO Roy Morgan, says mortgage stress is continuing to increase in Australia as the RBA continues to lift interests and is set to mean over 1.2 million mortgage holders will be considered ‘At Risk’ if the RBA raises interest rates in each of the next two months:

Block Quote

“The latest Roy Morgan data shows mortgage stress in the Australian housing market has continued to increase with 1.1 million mortgage holders (23.9%) defined as ‘At Risk’ in December 2022, up 358,000 on a year ago before the RBA began hiking interest rates.

“The figures for December 2022 take into account all eight of the RBA’s interest rate increases so far which have lifted official interest rates from 0.1% in early May to end the year at 3.1% – the highest level of official interest rates for exactly a decade since December 2012.

“For the first time in this cycle of interest rate increases the proportion of mortgage holders considered ‘At Risk’ has increased above the long-term average of 22.8% and is at its highest for nearly a decade since May 2013.

“The latest ABS CPI figures for the year to December 2022 show Australian inflation hitting a 33 year high of 7.8% – the highest March 1990 (7.8%). The rising inflation level in Australia, and all the indications from the RBA, suggest interest rates will increase again when the RBA meets again in February by +0.25% and again in March by another +0.25% to 3.60%.

“If the RBA does raise interest rates again in the next two months by a total of 0.50% Roy Morgan forecasts that mortgage stress is set to increase to over 1.2 million mortgage holders considered ‘At Risk’ by March 2023 – 26.3% of all mortgage holders.

“Of more concern is the rise in mortgage holders considered ‘Extremely At Risk’, now estimated at 666,000 (15.0%) in December 2022 – the highest since July 2017 (15.1%) more than five years ago.

“When considering these figures on mortgage stress it is always important to take into account that interest rates are only one of the variables that determines whether a mortgage holder is considered ‘At Risk’. The variable that has 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 latest figures on mortgage stress show that as long as employment levels remain strong the number of mortgage holders considered ‘At Risk’ will not increase to anywhere near the levels experienced during the Global Financial Crisis in 2007-08-09 when a peak of 35.6% of mortgage holders were considered ‘At Risk’ in May 2008.

“The latest Roy Morgan employment estimates show a near-record 13.6 million Australians were employed in December 2022, up by over 650,000 since February 2020 when there were 12.9 million employed pre-pandemic. The strong growth in the jobs market has attracted more Australians into the labour force and there are now over 1.38 million unemployed Australians (9.3% of the workforce) compared to 1.17 million pre-pandemic.”

These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year including over 10,000 owner-occupied mortgage-holders.

To understand more about mortgages in the full context of household finances and the uncertainties caused by the COVID-19 coronavirus and rising interest rates and inflation, ask Roy Morgan.

To learn more about Roy Morgan’s mortgage data, call (+61) (3) 9224 5309 or email askroymorgan@roymorgan.com.

Please click on this link to the Roy Morgan Online Store.

About Roy Morgan

Roy Morgan is Australia’s largest independent Australian research company, with offices in each state, as well as in the U.S. and U.K. A full-service research organisation, Roy Morgan has over 80 years’ experience collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size Percentage Estimate
40% – 60% 25% or 75% 10% or 90% 5% or 95%
1,000 ±3.0 ±2.7 ±1.9 ±1.3
5,000 ±1.4 ±1.2 ±0.8 ±0.6
7,500 ±1.1 ±1.0 ±0.7 ±0.5
10,000 ±1.0 ±0.9 ±0.6 ±0.4
20,000 ±0.7 ±0.6 ±0.4 ±0.3
50,000 ±0.4 ±0.4 ±0.3 ±0.2
Back to topBack To Top Arrow