The latest Roy Morgan research revealed that 26.2% of mortgage holders were classified as “at risk” of mortgage stress in the three months to October.
This figure represents a 4.1% drop since June, coinciding with the introduction of Stage 3 tax cuts that boosted household incomes.
The current level is the lowest since February 2023, providing some relief to homeowners grappling with higher interest rates.
“The share of mortgage holders ‘at risk’ has fallen below 1.5 million for the first time this year and is at its lowest for over a year,” said Michele Levine (pictured above), CEO of Roy Morgan.
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Despite the improvement, 680,000 more Australians have entered the ‘at risk’ category since May 2022 when the Reserve Bank (RBA) began its interest rate hikes. Official rates now sit at 4.35%, their highest level since December 2011, with 16.7% of mortgage holders considered “extremely at risk.”
Levine stressed that rising incomes and declining inflation have eased some financial strain. However, she cautioned, “Interest rates are only one variable; household income, largely tied to employment, plays a critical role in determining mortgage stress.”
Roy Morgan has modeled the potential impact of a 0.25% rate cut in December, projecting the share of “at risk” mortgage holders to drop to 25.9% (1,475,000) by year-end.
A further decline to 25.7% (1,463,000) is expected in early 2025 if rates are reduced to 4.1%.
Inflation trends support this optimism, with September figures showing annual inflation at 2.8%, the lowest in over three years and within RBA’s target range. 
“The rapid decline in inflation pressures suggests the RBA’s next move in interest rates is likely to be down,” Levine said.
While a potential rate cut would provide immediate relief, Levine highlighted the importance of employment stability in combating mortgage stress.
“The largest factor impacting mortgage stress is household income, which is directly tied to employment,” the Roy Morgan leader said, pointing to Australia’s strong job market as a stabilising force.
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