February marked a notable decrease in mortgage stress, attributed to the Reserve Bank’s decision to lower interest rates—the first cut since 2020.
Roy Morgan’s latest research indicated that the percentage of mortgage holders “at risk” fell to 27.7%, a drop of 1.2 percentage points from January.
“The latest Roy Morgan data shows 1,549,000 Australians were ‘at risk’ of mortgage stress in February. The share of mortgage holders ‘at risk’ (27.7%, down 1.2% points from January 2025) has decreased for the first month since October,” said Michele Levine (pictured), CEO of Roy Morgan.
Looking ahead, further reductions in mortgage stress are expected.
Roy Morgan has projected additional declines in the “at risk” population, contingent on successive rate cuts planned by the Reserve Bank.
“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 1,489,000 (26.7% of mortgage holders) and a further cut of +0.25% to 3.6% in May, the number of mortgage holders ‘at risk’ of mortgage stress would decline to 1,411,000 (25.3% of mortgage holders) in May 2024, a fall of 138,000 on current figures,” Levine said.
Equifax’s recent consumer credit data, meanwhile, underscored a revitalised housing market, evidenced by a 4% increase in overall mortgage demand following the rate cut, with month-over-month demand rising by 24%.
“Off the back of the RBA’s rate cut announcement, we saw a 4% increase in all mortgage demand. Similarly, month-over-month mortgage demand rose by 24%,” Equifax reported.
The data also showed a significant year-on-year increase in refinancing demand among major and Tier 2 banks.
Despite the positive short-term impact of the rate cuts, long-term stability in the housing market remains tied to broader economic conditions, especially employment.
“The employment market has been strong over the last two years and this has provided support to household incomes which have helped to moderate levels of mortgage stress over the last year,” Levine said.
