Mortgages in arrears ease as rate cuts provide some relief
12 Sept 2025
The value of home loans in arrears by 30 to 89 days dropped to 0.55% of all credit outstanding in the June 2025 quarter, down from 0.60% in the previous quarter, as cash rate cuts start to provide relief for some borrowers struggling to meet repayments.
The latest APRA Quarterly ADI Property Exposure statistics, released yesterday, showed the value of non-performing mortgages – those overdue by 90 days or more or impaired – also fell to 1.07% in the June quarter, down from 1.08% in the previous quarter, as a proportion of all outstanding loans.
New lending hits a new record high
The APRA figures also show the total value of new loans grew by $33 billion in the June quarter (+21.3%) to $187.6 billion, the highest level on record.
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| Total new loans funded | ||
|---|---|---|
| June 25 quarter | Change from previous quarter |
Change from June 24 quarter |
| $187.6 billion
record high |
+$33 billion
+21.3% |
+$26 billion
+16.2% |
Source: APRA Quarterly ADI Property Exposure statistics. Based on all authorised deposit-taking institutions, excluding payment facilities and specialist credit card providers.
Loans via brokers hits record high
The value of new loans taken out via a third party, such as a broker, increased to 63.4% of all term loans in the June quarter, up from 62.7% in the previous two quarters. This is the highest level on record.
According to APRA, third party originated mortgages refer to loans where the ADI’s primary contact with the borrower at origination is through a mortgage broker or another external party.
Offset balances take a hit at the end of the financial year
The total amount of money in mortgage offset accounts now stands at $301.9 billion, this was a drop of $5.7 billion in the June quarter (-2%).
Offset balances now account for 11.2% of credit limits owing across the mortgage books of authorised deposit-taking institutions.
While this is down from 11.6% in the March 2025 quarter, offsets as a proportion of all credit is up from 10.4% a year ago.
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| Total amount in residential offset accounts | ||
|---|---|---|
| June 25 quarter | Change from previous quarter |
Change from June 24 quarter |
| $301.9 billion | -$5.7 billion
-2% |
+$36.3 billion
+14% |
Source: APRA Quarterly ADI Property Exposure statistics. Based on all authorised deposit-taking institutions, excluding payment facilities and specialist credit card providers.
Arrears drop a step in the right direction
Canstar’s data insights director, Sally Tindall says, “Rate cuts are giving some households just enough breathing room to get back on top of their repayments. It’s a welcome reprieve, but it doesn’t mean the mortgage pain is over.”
“It’s encouraging to see arrears heading in the right direction, but many borrowers aren’t out of the woods yet.
“For the average owner occupier with a $600,000 debt at the start of the hikes, their minimum monthly repayments will have dropped by around $272. This kind of relief will help fix up cracks in a budget that’s bursting at the seams but it won’t leave them with a windfall.
“The drop in arrears this quarter might be minor, down from 0.60 per cent to 0.55 per cent as a share of all lending, but behind these figures are households trying to keep the roof over their heads. It serves as a good reminder that while some borrowers are bouncing back, a small proportion are still falling behind.
“New lending has gone through the roof, with more than $187 billion in mortgages funded in just three months. Buyers are clearly back in force, spurred on by lower rates, however, with rising property prices, households are also taking on bigger debts.
“The data also confirms that brokers are continuing to win the tug-of-war for new customers, despite the fact the big banks have been rolling out some of their sharpest rates to their direct-to-bank, online-only loans.
“With almost two-thirds of new term loans now written through a third party, according to the APRA data, borrowers are clearly leaning on expert help to navigate the mortgage maze.
“The drop in offset balances at the end of the financial year suggests some households may have dipped into their savings to shop in the sales or pay down debt. However, compared to a year ago, balances are still up, showing that plenty of people are getting ahead on their mortgages where they can.”
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
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