Over a million Aussie homeowners at risk of facing mortgage stress, finds Roy Morgan

By Evlin DuBose · · 2 min read
Fact Checked
Advertiser disclosure
Collage of a woman looking over the edge.

New research from Roy Morgan reveals that if the Reserve Bank of Australia hikes rates again in December, it could put a quarter (25.1%) of home loan borrowers at risk of mortgage stress.

More Australians may fall behind in the RBA’s war against inflation

Collage of a man plummeting down a red chasm.

By January 2023, over 1.1 million Australian households may have to put anywhere between 25% to 40% of their after-tax incomes towards their mortgage repayments, finds Roy Morgan.

More worryingly, nearly 14.4% of mortgage borrowers are considered ‘Extremely At Risk’ as of October 2022 – the highest level since pre-pandemic. 

The research seemingly corroborates what has been felt at the domestic level since official interest rates first began to climb in May 2022. 

Property prices have plummeted in a chillier housing market, and even the RBA governor has apologised for making misleading and incorrect predictions about the path of rate hikes. 

But with inflation at a thirty-year high, the RBA has prioritised tackling price growth over a decline in real wages – at the expense of homeowners. Rising interest rates may therefore threaten to push more borrowers into the mortgage trap, which has the worrying potential to spark a recession and undo all the RBA’s efforts. It’s a risky gamble.

But does a surge in at-risk mortgage holders mean imminent doom? Not necessarily, explains Roy Morgan chief executive, Michele Levine.

High employment rates hold off recession – for now

Collage of a woman holding up a falling red arrow.

Levine points to employment as a more critical bellwether of distress, since the loss of income hurts far more than rising interest rates. So long as employment levels remain strong, she says, we likely won’t face the spiral of at-risk holdings and mortgage defaults that defined the Global Financial Crisis in 2007 - 2009. 

“The latest Roy Morgan employment estimates show a near-record 13.5 million Australians were employed in October 2022,” continues Levine, up from even pre-pandemic levels, so there is room for optimism.

However, Roy Morgan admits its mortgage risk figures are ‘conservative’, and unemployment has already shown tiny upticks since October.

“Other influences such as increasing inflation, interest rates, and supply chain challenges caused by extreme weather events are set to be key factors driving employment outcomes during the upcoming year,” concludes Levine. 

In the meantime, it falls to homeowners to manage their repayments and the RBA to chart the best path forward.

Why does the RBA do what they do? Learn more in our monetary policy guide. Compare home loans on offer below.

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can compare more home loans here.
Last updated 24 October 2024 Important disclosures and comparison rate warning*

Home loan comparisons on Mozo

Promoted

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.59 % p.a.
    Fixed 5 years
    Comparison rate
    6.27 % p.a.
    Initial monthly repayment
    $2,867

    Get repayment certainty with HSBC’s low 2 Year Fixed Rate Home Loan. Make up to $10,000 of extra repayments a year. The option to split your home loan between fixed and variable. Plus, score $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 28 February 2023 and settle by 30 April 2023.

  • 2-Year Discounted - Simple Home Loan Variable

    • Owner-Occupied
    • Principal and Interest
    • LVR<60%
    Interest rate
    5.54 % p.a.
    Variable for 24 months and then 5.99% p.a.
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,988
    Go to site

    Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.

  • Variable Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.98 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,991
    Go to site

    Competitive variable rate on up to a 30 year loan term. No application fees to pay. Unlimited additional repayments. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discounted Home Value Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.99 % p.a.
    Initial monthly repayment
    $2,995

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Receive $3,288 cashback when you refinance an existing home loan. Minimum loan amount of $250,000, settle within 120 days from applying.

  • Simple Home Loan Variable

    • Owner-Occupied
    • Principal and Interest
    • LVR<60%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.99 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    5.99 % p.a.
    Fixed 3 years
    Comparison rate
    6.89 % p.a.
    Initial monthly repayment
    $2,995

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Elevate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.18 % p.a.
    Variable
    Comparison rate
    6.18 % p.a.
    Initial monthly repayment
    $3,056

    Get competitive rates on loan terms of 5 to 30 years with the Aussie Elevate Home Loan. Structure your loan with up to five splits. Make additional repayments (T&Cs apply). Offset accounts available. Unlimited redraw using your online banking account. Choose from weekly, fortnightly or monthly payments For loan amounts from $10,000 to $5 million.

image of houses

Need help with your Home Loan?

Whether you're looking to purchase a new home or refinance your existing loan, our friends at Lendi can help! Lendi’s expert advice is completely free of charge.

Learn more

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare home loans