Every borrower in Australia has one date circled right now: 29 September. All four major banks now expect the cash rate to rise to 4.60%, NAB as soon as this month and the others by November. RBA Deputy Governor Andrew Hauser told ABC's 7.30 last week, "we have one big problem, and that's inflation." So the whole country is running the same mental exercise: can I survive one more hike?
It's a sensible question. It's just not the most important one. Buried in Roy Morgan's latest mortgage stress survey is a number that suggests most households are stress-testing the wrong thing.
An 18-year high - and a hike that barely moves it
Roy Morgan's July reading, released on 1 September, puts 32.5% of mortgage holders - about 1.79 million Australians - "at risk" of mortgage stress. That's up 2.2 percentage points in a single month, 341,000 more people than a year ago, and the highest level since September 2008. The tougher "extremely at risk" measure sits at 22%, against a two-decade average of 16.4%.
Now the interesting part. Roy Morgan also modelled what happens if the Reserve Bank does hike to 4.60% this month. The at-risk share rises to 32.7%. Then 33.1% by October.
Read that again. July alone added 2.2 points. A full rate hike adds 0.2.
So what drove July? Roy Morgan's CEO Michele Levine pointed straight at the labour market: "Full-time employment has weakened considerably, and this has a direct, and negative, impact on household incomes." Roy Morgan's own survey estimates full-time employment fell by 228,000 between January and July. The ABS figures are softer but pointing the same way - unemployment rose to 4.5% in July, employment fell by 16,000 and hours worked dropped by 12 million.
Why income beats interest: the maths on one kitchen table
Stress measures like Roy Morgan's compare repayments with after-tax income. That gives you two ways to get into trouble: the repayment goes up, or the income goes down. They are not the same size.
Take a household whose repayments currently eat 30% of take-home pay on a typical variable loan. A 0.25 percentage point hike, passed on in full, lifts a 30-year principal-and-interest repayment by roughly 2.5-3%. Their ratio goes from 30% to about 31%. Uncomfortable, survivable.
Now leave the rate alone and have one partner drop to part-time, cutting household take-home pay by a quarter. The repayment hasn't changed, but the ratio jumps from 30% to 40%. One hike nudges the needle. One income change moves it more than ten times as far.
This isn't just a survey quirk. RBA research on why Australian mortgages actually go into arrears supports what economists call the "double-trigger" pattern: loans usually fall behind after an ability-to-pay shock - job loss, lost hours, illness, separation - while falling prices mainly decide whether arrears end in a forced sale. The same research found prepayment buffers are what stop an income shock turning into missed payments.
The good news hiding in the bad news
"At risk" is not the same as "in arrears". The RBA's March Financial Stability Review found around 1% of variable-rate owner-occupiers had a cash-flow shortfall at the end of 2025, and only around 0.3% had both a shortfall and thin buffers. Loans more than 90 days behind were back around pre-pandemic levels. Most stretched households are cutting back, not falling behind.
That gap between "stretched" and "behind" is exactly where your decisions still count. I covered the Reserve Bank's side of this dilemma in The RBA's Impossible September. This is the household side, and the tools are different.
What to actually do
- Measure your buffer in months, not dollars. Divide what's sitting in your offset or available redraw by your monthly repayment. That number tells you how long you could keep paying if an income stopped - which matters more than whether the next hike is 0.25 or zero.
- Run the income test, not just the rate test. Put your repayment into our mortgage calculator, then ask: could we still pay it on the smaller income alone, or on the bigger income cut by a quarter? If the answer is no, the buffer is your priority before anything else.
- Don't treat fixing as job insurance. A fixed rate locks the repayment, not the pay cheque. Fixed loans often limit extra repayments and offset use, and can cost you to break if you later need to sell. It can still be the right call - just not for this reason.
- If your income wobbles, call the lender before you miss a payment. Tell their hardship team what has changed, how long you expect it to last and what you can afford. Lenders can pause, reduce or restructure repayments for a period, and they must answer a hardship request in writing, generally within 21 days. The free National Debt Helpline is on 1800 007 007.
- Buying or refinancing soon? Protect the application. Lenders assess your employment as well as your rate. Changing jobs, starting a probation period or dropping hours just before settlement can cause more trouble than the September decision will.
Whatever the Board does on 29 September, it will move your repayment by a sliver. The thing that decides whether this year is a squeeze or a crisis for your household is sitting on your payslip, and in how many months of it you've got stashed in the offset.
Frequently Asked Questions
How many Australians are in mortgage stress in 2026?
Roy Morgan estimates 32.5% of mortgage holders, about 1.79 million Australians, were at risk of mortgage stress in the three months to July 2026. That is the highest level since September 2008 and up 2.2 percentage points on June. A further measure, "extremely at risk", covered 22% of mortgage holders, well above its two-decade average of 16.4%.
How much would a September 2026 rate hike increase mortgage stress?
Roy Morgan modelled a 0.25 percentage point rise to 4.60% at the 29 September meeting and projected the at-risk share would rise from 32.5% to 32.7%, then to 33.1% by October. That is a real increase, but a small one compared with the 2.2 point jump recorded in July alone, which Roy Morgan linked mainly to weakening full-time employment.
What causes most mortgage arrears in Australia?
RBA research on mortgage defaults supports a "double-trigger" pattern: loans usually fall into arrears after an ability-to-pay shock such as job loss or reduced income, and falling property prices mainly matter for whether arrears end in a forced sale. Borrowers with larger prepayment buffers, such as money in an offset or redraw, are less likely to fall behind when an income shock hits.
What can I do if I can't make my mortgage repayments?
Contact your lender's hardship team as early as possible and explain what has changed, how long you expect it to last and what you can afford to pay. Lenders can vary the loan, for example by pausing or reducing repayments for a period, and must respond to a hardship request in writing, generally within 21 days. If you are unhappy with the outcome you can complain to AFCA, and the free National Debt Helpline is on 1800 007 007.
Does fixing my home loan protect me from mortgage stress?
Fixing protects your repayment amount from rate rises during the fixed term, but it does nothing to protect the income that pays it. Fixed loans also usually limit extra repayments and offset use, and can carry break costs if you need to sell or refinance. For many households, the size of their cash buffer matters more to resilience than whether the rate is fixed or variable.
