What is mortgage stress?

Feel like more and more of your paycheque is going towards mortgage repayments and you’re struggling to balance the household budget? You’re not alone. The National Debt Helpline (NDH) says it received 65,000 calls in the first four months of 2026, with mortgage stress being the main reason.

Concerningly, this might just be the tip of the iceberg. Roy Morgan’s latest data estimates nearly a third (29.8%) of Aussie mortgage-holders are likely at risk of mortgage stress in May–thats more than 1.5 million borrowers.

Roy Morgan CEO Michele Levine says the rate of mortgage stress increased significantly in the first few months of 2026. She warns if the RBA hikes rates again in June, another 47,000 homeowners are likely to find themselves in mortgage stress, pushing that figure up to 30.7%. To put the current situation in perspective, the long-term average of borrowers at risk of mortgage stress over the last two decades is 16.3%.

What can I do if I’m in mortgage stress?

Mortgage stress is commonly defined as more than 30% of household income being devoted to mortgage repayments, but this may not always be the case, and there are many reasons you may be feeling the pressure.

If your mortgage is becoming an overwhelming strain on your finances, there are a number of practical steps you could take to help ease the burden:

Contact your lender

The idea of picking up the phone and talking to your lender about mortgage stress may seem scary, but it will have ways to assist you. It might be able to suggest changes to make your home loan repayments more manageable, even if it’s temporary, saving you even more worry down the line.

You might be able to:

• Reduce your repayments: If you’re paying more than the minimum each week, fortnight, or month (as is common after a series of rate cuts), it could be possible to reduce your repayments or change their frequency.
• Access extra funds in your home loan: If you have a redraw facility, it could be possible to withdraw extra repayments you’ve made in the past to cover repayments.
• Swap to interest-only repayments: This can temporarily ease the burden of home loan repayments by allowing you to only pay interest accumulating on your loan. This can buy you time, the tradeoff being that you’ll pay more over the long term.
• Restructure your loan: If you have a variable home loan rate and worry it might go up in the coming months, you could speak to your lender about refinancing to a fixed rate. This can give you more certainty over your repayments, as long as your lender has a suitable fixed rate to offer you.
• Ask for a repayment holiday: If your hardship is likely temporary, your lender might offer you a repayment holiday. Beware, though, that interest will keep accumulating on your debt and, in some cases, interest might be charged on interest (known as capitalisation), which can cause debt to snowball.

Consider refinancing

Is your home loan rate higher than you’re happy with? You might consider refinancing your mortgage to a lender with a more competitive interest rate.

As of May 2026, the average variable rate on a basic home loan sits around 6.38% p.a., according to Canstar Research. On a $600,000 home loan, 30-year mortgage, that could equate to approximately $3,750 in monthly repayments.

But you don’t necessarily have to settle for the average. At the same time, rates of around 5.99% p.a. exist in the market. That would demand just under $3,600 in monthly repayments on the same debt–a potential saving of more than $1,800 a year.

Keep in mind there are normally fees and charges associated with refinancing. Make sure to weigh up the cost and benefit of refinancing before making a decision. If you want to know how your interest rate could impact your repayments, you can use our calculator to get an estimate.

Refinance your home loan

Speak to a financial counsellor

Services like these can offer information and support if you’re struggling with debt. In some cases, they may negotiate with your creditors on your behalf. Options include:

• The National Debt Helpline: You can contact the NDH on 1800 007 007 or access its “Find a financial counsellor” map to find financial counsellors around Australia.
• The Salvation Army’s Moneycare: If you’re feeling overwhelmed by rising costs, you can contact Moneycare on 1800 722 363 or arrange a live chat with a counsellor on its website.
• Mob Strong: This service offers free legal advice and financial counselling for Aboriginal and Torres Strait Islander people nationwide. You can contact them on 1800 808 488.

How do you measure mortgage stress?

While there is no firm consensus on how to measure mortgage stress, a frequently used yard stick is when a household spends 30% or more of its pre-tax income on home loan repayments.

The Australian Bureau of Statistics also says it can be useful to apply the ‘30/40 rule’ when looking at mortgage stress. Per this rule, if a household is in the bottom 40% of income distribution and spends more than 30% of gross income on housing costs, they may fall into mortgage stress.

The 30/40 rule takes into account the fact that a higher-income household may spend more than 30% of its earnings on housing without falling into financial hardship.

What are the signs of mortgage stress?

As the actual definition of mortgage stress can vary, it can be more useful to take a look at your own situation to determine if you may be in mortgage stress. Signs include:

• Difficulty meeting repayments: Struggling to make repayments on time, dipping into savings, or borrowing money to cover mortgage repayments.
• Cutting back on the essentials: Reducing your spending on essentials like groceries and utilities because your mortgage repayments have grown.
• Living paycheque to paycheque: Finding that your ability to save is not what it used to be, and you’re spending your whole paycheque to get by.
• Putting more purchases on credit cards: Using a credit card to cover essential spending or pay bills because you don’t have the cash available.
• Difficulty budgeting for unexpected expenses: Concern that you wouldn’t have cash for emergency car repairs or medical bills if you needed it.
• Emotional distress: Sleepless nights and anxiety over your mortgage and the effect it’s having on your and your family’s finances.