Two in five Aussies are struggling more since rates were cut. Picture: Christian Gilles
Poorer homeowners have become worse off since the Reserve Bank announced three interest rate cuts this year, with rates of mortgage stress among the bottom 40 per cent of earners steadily climbing.
Polling from research group Roy Morgan revealed the share of lower earners “extremely at risk” of spending an unsustainable amount of their money on repayments was 5 per cent higher than a year ago.
The struggles of lower income families were a sharp contrast to the top 60 per cent of earners, who were less at risk of mortgage stress than a year ago, Roy Morgan revealed.
An estimated one million mortgage holders (18.5 per cent) were “extremely at risk” of mortgage stress in the 12 months to June 2025, down from 19.7 per cent in June 2024.
Part of the reason these benefits were not equally distributed across income levels was that higher paid households were typically getting better wage increases and some tax relief.
It was the opposite for lower paid jobs. Wages for lower income professionals were not growing as rapidly and were not keeping pace with increases in the cost of living.
Rising unemployment has also overwhelmingly affected households who were already surviving on lower incomes.
This meant that even with cheaper repayments, poorer households were falling further behind financially, and were more at risk of being lumped with loan repayments they simply couldn’t afford.
Roy Morgan CEO Michelle Levine said the data showed a clear difference in how rate cuts were impacting households.
“The benefits of these economic trends have not been evenly distributed,” she said.
MORE: Aussies warned: Scam email trapping everyone
Canstar analyst Sally Tindall said struggling homeowners should talk with their bank.
“The reduction in mortgage stress was concentrated among households in the top three socio-economic quintiles, representing 60 per cent of Australians.
“In contrast, mortgage stress increased among those in the bottom two quintiles (40 per cent of Australia).”
The Roy Morgan data suggests lower income households would need substantially more interest rate relief to see a meaningful change in their financial situation.
Canstar data insights director Sally Tindall said a typical mortgage holder with a $600,000 loan would have seen their repayments drop by about $272 a month across the three rate cuts.
She said this would be equivalent to an extra trolley of groceries each month – which would be a minor benefit without an additional increase in income.
MORE: Aus warned: ‘Crazy’ effect of Albo’s new plan
Ms Tindall explained that most households were continuing to pay the same minimum amount on repayments following rate cuts, which was a good idea for those who could afford it.
Those who could not afford the same repaymennts needed to talk with their lenders, she said.
“It’s worrying that some people might not be making an active choice,” Ms Tindall said.
“The key is to make it a conscious decision. If you need the cash, or if you want that extra money in your offset account, rather than directly in your mortgage, ask your bank to drop your repayments and redirect the funds to where you need them.”
English (US) · 