The Albanese government's push to boost home ownership has coincided with a sharp rise in mortgage stress, with new research showing 29% of Australian mortgage holders—about 1.54 million people—are now at risk. This represents an increase of 65,000 in just one month, according to Roy Morgan data released this week. The figure follows a series of Reserve Bank rate hikes that have increased borrowing costs significantly.
Mortgage Stress on the Rise
Roy Morgan reports that more than two-thirds of those at risk are considered "extremely at risk," meaning mortgage payments consume over 25–45% of their after-tax income. Many recent homebuyers face a difficult trifecta: high purchase prices, high loan-to-value ratios, and rising interest rates. With auction clearance rates falling and house prices projected to decline nationwide, some homeowners may even face negative equity—owing more than their property is worth.
Mental Health Consequences
Research has long linked mortgage stress to poorer mental health. Studies after the 2008 global financial crisis found homeowners unable to meet repayments were more likely to experience depression. Mortgage foreclosures are also systematically associated with mental health decline. This pattern is not unique to Australia; similar links exist in the US, Canada, the UK, and Japan.
Income and gender differences play a role. Lower-income groups experience worse mental health outcomes from housing affordability burdens, but higher-income groups are not immune. Women tend to report higher psychological stress from debt than men, partly due to lower non-housing wealth and greater caregiving responsibilities.
Retirement and Debt
Outright home ownership provides a wellbeing premium through improved mental health and financial satisfaction. However, mortgaged owners under 50 are still more financially satisfied than renters. For those carrying mortgage debt past 50, financial satisfaction drops to renter levels, reflecting the stress of late-life repayments as more Australians approach retirement with a mortgage.
Since the start of this year, over 82,000 Australians have contacted the National Debt Helpline, with mortgage stress among the top reasons. Rising interest rates clearly harm wellbeing for those affected.
Coping Strategies and Policy Options
Homeowners can consider refinancing or contacting lenders early to discuss hardship arrangements. Mental health also affects financial resilience; poor mental health can hinder employment and financial management. Physical activity and social engagement can help navigate mortgage stress.
Governments can assist through temporary mortgage relief programs. However, Australian households are among the most indebted in the OECD, mostly in housing. Longer-term measures like shared equity programs could help future homebuyers reduce reliance on mortgage debt.
