Mortgage Stress in 2026: What To Do If Your Home Loan Repayments Have Become Unaffordable

Roy Morgan now classes 1,786,000 Australians as being at risk of mortgage stress, the highest level in 18 years. If you are one of them, the single most useful thing to know is this: checking whether you can get a better rate costs you nothing. Lender Edge charges no broker fees, a rate comparison is not a credit application, and you are under no obligation to switch.

What does mortgage stress actually mean?

Mortgage stress is a research classification, not a legal status, a credit marker or anything your lender can see. It is produced by Roy Morgan from its Single Source survey of Australians who hold an owner-occupied home loan.

Roy Morgan uses two measures:

• At Risk: repayments exceed a threshold share of household income, where the threshold varies according to income level and spending rather than sitting at one fixed percentage.
• Extremely at Risk: the interest component alone exceeds a set proportion of household income.

That distinction matters, and news coverage regularly flattens it. Being counted as At Risk is a statistical estimate about a household profile. It does not mean you are behind on repayments, and it does not appear on your credit file. Commonwealth Bank has pointed out that 30-day arrears sit at roughly 1.3 per cent, which the bank considers a normal range.

The more useful question is not whether you fall inside a survey category. It is whether your repayment is higher than it needs to be. For a large number of South Australian borrowers, it is.

How many Australians are in mortgage stress in 2026?

Roy Morgan recorded 32.5 per cent of mortgage holders as At Risk in July 2026, equivalent to 1,786,000 people, up 180,000 in a single month and rising for a sixth consecutive month. Here is how the current picture reads across the main indicators.

Is Australia heading for its worst-ever housing crash?

No, at least not on the evidence currently available. Recent coverage in The Advertiser and elsewhere has described the market in record-breaking terms. Lender Edge reads the same coverage clients do, and three corrections are worth making before you act on it.

Mortgage stress is at an 18-year high, not a record

The 32.5 per cent reading is the highest since September 2008. The all-time peak was 35.6 per cent in mid-2008, when the cash rate reached 7.25 per cent. We are meaningfully below that level.

A September rate rise is not settled

Coverage describing a fourth hike as almost certain overstates the position. NAB, Deutsche Bank and UBS have moved to forecasting a rise on 29 September. Commonwealth Bank and ANZ lean towards November. Westpac expects no change at all for the rest of 2026. When four major forecasters land in three different places, the honest description is genuine disagreement, not certainty. Our guide to the RBA cash rate and your mortgage explains why your own rate does not always move in step with the Board in any case.

The 20 per cent price fall is a tail risk, not a forecast

AMP's Dr Shane Oliver described a 20 per cent peak-to-trough decline as a worst-case scenario requiring a recession and a sharp rise in unemployment on top of existing headwinds. Commonwealth Bank's published forecast is a 9 to 10 per cent fall followed by a modest recovery in 2027. Those are very different propositions, and a headline that merges them does not help anyone budget.

One further correction. Some coverage has described At Risk as meaning a household directs between 25 and 45 per cent of after-tax income to its home loan. Roy Morgan's threshold is not a fixed band. If you want a rough personal check, 30 per cent of gross household income towards housing is the more conventional benchmark, and it is a guide rather than a rule.

Why are South Australian borrowers affected differently?

Because Adelaide rose further and faster than most capitals, and has only just started to turn. Dr Oliver has noted that since the end of 2020, Adelaide values rose roughly 88 per cent, against about 38 per cent in Sydney and 16 per cent in Melbourne. Strong gains cut both ways: they build equity, and they leave valuations further from trend when conditions change.

Cotality recorded Adelaide down 0.8 per cent in August, the city's steepest monthly fall of this cycle, with 93 per cent of capital city suburbs declining through winter. Adelaide remains positive on an annual basis, which is exactly why the next twelve months matter more than the last twelve.

For Fleurieu Peninsula and Adelaide Hills borrowers there is a further layer. Lifestyle blocks, acreage and rural residential properties are valued and assessed differently to a suburban house, and lender appetite for them varies enormously. In a falling market, that variation widens. If your property sits on more than a couple of hectares, has a shed-to-house value ratio a valuer will query, or relies on tank water, the list of lenders willing to refinance you at a sharp rate is shorter than general comparison sites suggest. This is the core of what Lender Edge does. See our guide to buying acreage on the Fleurieu or Adelaide Hills.

What is the loyalty tax, and is my bank charging me one?

The loyalty tax is the gap between the rate your lender offers new customers and the rate it leaves you paying on the same product. ASIC's work on home loan pricing found that existing borrowers at the big four typically pay roughly 0.30 to 0.50 percentage points more than a new customer at the same bank.

Canstar has estimated that an owner-occupier who took out a loan five years ago and has never renegotiated is likely sitting near 6.98 per cent, at a time when dozens of lenders were advertising variable rates below 6 per cent.

That gap is not a mistake and it is not personal. It is pricing architecture: sharp rates win new business, and inertia protects margin on the existing book. The only thing that closes it is a borrower who asks, or a broker who asks on their behalf.

Borrowers are noticing. ABS Lending Indicators show owner-occupiers refinanced a record $42.9 billion to a new lender in the March quarter of 2026 across 66,617 loans, with a further $27.3 billion refinanced internally, up 30.1 per cent year on year by value.

If you have not reviewed your rate in two years, assume you are paying the loyalty tax until you have proved otherwise. Our full explainer, Should You Refinance Your Home Loan in 2026?, works through when that assumption holds and when it does not.

How much can refinancing actually save me?

On a $600,000 owner-occupier loan with 25 years remaining, a 0.70 per cent improvement is worth about $262 a month, $3,149 a year, and roughly $15,700 over five years before switching costs. The table below shows the same comparison across a range of balances.

Two points of context:

• Switching costs are modest. Canstar uses roughly $1,150 as a working figure for the cost of moving lenders. In South Australia there is no stamp duty on a refinance, which shortens the break-even period compared with some other states.
• A single 0.25 per cent rate rise costs about $93 a month on that same $600,000 loan. Closing a typical loyalty gap therefore absorbs roughly three rate rises. That is a more productive frame than waiting to see what the RBA does.

Run your own numbers first, including before you speak to us. The Lender Edge refinance scenario calculator does the comparison using your balance, rate and remaining term. Our repayment calculator and repayment frequency calculator cover the other two levers.

The honest caveat. Refinancing is not automatically the answer. Break costs on a fixed rate can wipe out the gain. A small balance with a short remaining term may not justify the paperwork. And if your existing lender will simply reprice, that is faster and cheaper than switching. Lender Edge will tell you when staying put is the better move, even though it earns us nothing.

Does it cost anything to check whether I can get a better rate?

No. A rate review with Lender Edge is free, carries no obligation, and leaves no mark on your credit file. This is the part most borrowers under pressure get wrong: they assume that finding out is a commitment, or that it will cost them something, so they do nothing and keep paying the higher rate.

Here is precisely what a Lender Edge rate check involves and what it does not.

If your repayments are causing you stress, the cost of asking is zero and the cost of not asking, on a typical loyalty gap, is in the order of $3,000 a year. Send us your scenario or book a free 15 minute call.

Why is waiting risky when property values are falling?

Because refinancing depends on your property value and your borrowing capacity, and both are tightening at once. This is the point that mortgage stress coverage almost always misses, and it is the strongest argument against putting the conversation off.

• Valuation. National values are 3.6 per cent below the March 2026 peak and Adelaide has now joined the decline. If your loan-to-value ratio drifts above 80 per cent, Lenders Mortgage Insurance applies on a refinance and the sharpest rates disappear. Equity you have today may not be there in twelve months. See understanding Lenders Mortgage Insurance.
• Serviceability. Lenders assess you at roughly 3 percentage points above the actual rate, so as rates rise, the assessment rate rises with them and borrowing capacity falls. APRA's debt-to-income cap, in effect since February 2026, tightens this further for higher-DTI borrowers. See servicing, income and DTI explained.
• Credit conduct. A missed repayment, a new buy-now-pay-later account or an unused credit card limit can each move you out of contention. Limits are assessed, not balances. See how credit cards affect your borrowing power.

Borrowers who become genuinely stuck, sometimes called mortgage prisoners, are usually those who waited until the pressure was severe before acting. The window for a straightforward refinance is widest while equity is intact and repayment history is clean. You can sense-check your position with the Lender Edge borrowing power calculator.

What should I do first if my repayments have become unaffordable?

Start with the free and reversible steps, in this order. None of the first four costs you anything.

More options, including changes you can make without refinancing at all, are set out in how to manage your mortgage smarter in a rising rate environment.

What if I am already behind on repayments?

Contact your lender's hardship team first, and do it before you miss another payment. Every Australian lender has a statutory hardship process. Using it does not damage your credit file the way missed repayments do, and arrangements can include a temporary repayment reduction, a short payment pause or a term extension.

Then talk to a broker. Restructuring, consolidating, or extending a term can reduce immediate pressure while you get back on track, and some of those options remain available even when a full refinance is not. Lender Edge would rather have that conversation early with you than late.

Why use Lender Edge?

Lender Edge is a specialist mortgage broker based in Parawa on the Fleurieu Peninsula, working with borrowers across the Fleurieu, the Adelaide Hills and greater Adelaide.

• We compare 35+ lenders, including HomeStart Finance, which no bank panel includes.
• We charge no broker fees to clients.
• We are a full member of the MFAA and a member of AFCA, and we operate under Best Interests Duty, which legally obliges us to act in your interest rather than a lender's.
• We hold Elite tier accreditation with Commonwealth Bank, which affects escalation and turnaround on complex files.
• We specialise in acreage, lifestyle and rural residential lending, where lender policy varies most and generic comparison sites are least reliable.

A Lender Edge review starts with the loan you already have. We test whether repricing beats refinancing, whether restructuring beats both, and whether a switch is realistic given your current valuation and serviceability. If the answer is that you should stay where you are, that is what we will tell you. You can read more about Lender Edge, browse our refinancing page, or check the FAQs.

Frequently asked questions

Will asking a broker to check my rate affect my credit score?

No. A rate comparison is not a credit application and creates no enquiry on your credit file. An enquiry is recorded only when a formal application is lodged with a lender, which happens after you decide to proceed. Lodging four speculative applications will hurt you. One well-targeted application to a lender whose policy you already fit will not, and that targeting is most of what a broker actually does.

Am I in mortgage stress?

Roy Morgan's figure is a survey estimate, not a personal assessment. A practical self-check: divide your total monthly home loan repayment by your monthly after-tax household income. Above roughly 30 per cent, the loan is worth reviewing. Above 40 per cent with no buffer, it is worth reviewing this month.

Can I refinance if my property has fallen in value?

Usually yes, provided your loan-to-value ratio remains at or below 80 per cent. Above that, Lenders Mortgage Insurance applies on the new loan and the economics often stop working. This is precisely why acting while values are still close to peak matters.

Is there stamp duty on refinancing in South Australia?

No. Mortgage duty has been abolished in SA, so a straight refinance with no change of borrower or security attracts no stamp duty. Land Titles Office discharge and registration fees still apply.

Should I fix my rate before the next rise?

It depends on whether you need repayment certainty or repayment flexibility, not on a forecast. Forecasters currently disagree about September, November and 2027 alike. See fixed versus variable rate home loans.

What if I own acreage or a lifestyle block?

Land size, zoning, water supply and outbuilding values all change which lenders will consider your property and at what rate. Lender Edge specialises in exactly this. See buying acreage on the Fleurieu or Adelaide Hills.

What to do next