Risk of mortgage stress increased in January, before the Reserve Bank cut interest rates for the first time since 2020

New research from Roy Morgan shows 28.9% of mortgage holders are now ‘At Risk’ of ‘mortgage stress’. The research was conducted in the three months to January 2025 and represents a third straight monthly increase since October but is still 1.4% lower than the June figures prior to the Stage 3 tax cuts that increased household income for Australians.
The share of mortgage holders ‘At Risk’ of ‘mortgage stress’ in January (28.9% of mortgage holders) is the highest since August 2024. After the introduction of the Stage 3 tax cuts in July 2024 the share of mortgage holders ‘At Risk’ fell for four straight months until October but has now increased for three straight months after the Reserve Bank left interest rates unchanged late last year.
The record high of 35.6% of mortgage holders in mortgage stress was reached in mid-2008.
826,000 more ‘At Risk’ of mortgage stress more than two years after interest rate increases began
The number of Australians ‘At Risk’ of mortgage stress has increased by 826,000 since May 2022 when the RBA began a cycle of interest rate increases. Official interest rates are now at 4.10% after the RBA cut interest rates in mid-February for the first time in over four years.
The number of Australians considered ‘Extremely At Risk’, is now numbered at 1,043,000 (18.9% of mortgage holders) which is significantly above the long-term average over the last 10 years of 14.6%.
Mortgage Stress – % of Owner-Occupied Mortgage-Holders

Source: Roy Morgan Single Source (Australia), average interviews per 3 month period April 2007 – January 2025, n=2,839.
Base: Australians 14+ with owner occupied home loan.
Mortgages ‘At Risk’ set to drop further if the Reserve Bank cuts interest rates again in April
Due to the decline in inflation over the last year the Reserve Bank decided to cut interest rates in mid-February 2025 by +0.25% to 4.1%. Due to the fall in inflation and the Reserve Bank’s decision to cut interest rates Roy Morgan has modelled the impact of a potential RBA interest rate decrease in April 2025 of +0.25% to 3.85%.
In January, 28.9% of mortgage holders, 1,633,000, were considered ‘At Risk’ and this figure is projected to decrease by 26,000 in February 2025 to 1,607,000 (28.4% of mortgage holders, down 0.5% points) after the Reserve Bank cut interest rates by +0.25% to 4.1%.
Looking forward, the share of mortgage holders considered ‘At Risk’ will drop further in March, down an additional 27,000 to 1,580,000 in March 2025, equivalent to 27.9% of mortgage holders.
If the Reserve Bank follows up with an additional interest rate cut of +0.25% to 3.85% in April, the share of mortgage holders considered ‘At Risk’ will drop by an additional 33,000 to 1,547,000 in April 2025, equivalent to 27.4% of mortgage holders.
Mortgage Risk projections based on an interest rate decrease of +0.25% to 3.85% in April

Source: Roy Morgan Single Source (Australia), November 2024 – January 2025, n=4,122.
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.
Unemployment is the key factor which has the largest impact on income and mortgage stress
It is worth understanding that Roy Morgan uses a conservative forecasting model, essentially assuming all other factors apart from interest rates remain the same.
The latest Roy Morgan unemployment estimates show over one-in-five Australian workers are either unemployed or under-employed – 3,433,000 (21.4% of the workforce) – the highest level of overall unemployment or under-employment for almost five years since June 2020; (In January Australian unemployment increased to 10.1% due to a growing workforce with not all new entrants finding jobs).
Although the Reserve Bank’s decision to cut interest rates in February has clearly had a positive impact and will help to lower mortgage stress, the fact remains 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.
Michele Levine, CEO Roy Morgan, says although mortgage stress increased for a third straight month in January with 28.9% of Australians with a mortgage now considered ‘At Risk’, the Reserve Bank’s decision to cut interest rates will lead to lower mortgage stress going forward:
“The latest Roy Morgan data shows 1,633,000 Australians were ‘At Risk’ of mortgage stress in January 2025. The share of mortgage holders ‘At Risk’ (28.9%, up 1% point from December 2024) has increased for a third straight month.
“After decreasing for four straight months following the introduction of the Stage 3 tax cuts, mortgage stress increased for three straight months during November, December and January after the Reserve Bank (RBA) decided to leave interest rates unchanged during this period.
“The figures for January 2025 represent an increase of 826,000 considered ‘At Risk’ since the RBA began raising interest rates in May 2022 – and before the RBA’s first interest rate cut in mid-February which reduced interest rates by +0.25% to 4.1%.
“The latest ABS quarterly inflation estimates for December 2024 showed annual inflation at 2.4% – down 0.4% points from September 2024 and the ABS monthly inflation estimate for January 2025 was at 2.5% – right in the mid-point of the RBA’s preferred target range of 2-3%.
“This is the second straight quarter, and the sixth straight month, the official inflation estimates have been within the RBA’s preferred target range of 2-3% and is the driving factor behind the RBA’s decision to lower interest rates in mid-February.
“Even better news for those under mortgage stress is that so-called ‘core inflation’, also known as the ‘trimmed mean’, dropped into the RBA target range of 2-3% for the first time in December 2024 (2.7%) and was virtually unchanged at 2.8% in January 2025.
“The signs are good there will be further interest rate cuts in the months ahead, as long as official estimates of inflation stay within the 2-3% target range. For these reasons we have modelled the impact on mortgage stress of a cut to interest rates of +0.25%. If the RBA cuts interest rates by +0.25% to 3.85% in April the number of mortgage holders ‘At Risk’ of mortgage stress would decline to 1,547,000 (27.4% of mortgage holders) by April 2024, a fall of 86,000 on current figures.
“Finally, 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 1 million new jobs created compared to two years ago) and this has provided support to household incomes which have helped to moderate levels of mortgage stress over the last year.”
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 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.
[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 (25% to 45% depending on income and spending) into their home loan, based on the Standard Variable Rate set by the RBA and the amount now outstanding on their home loan.
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 |