In Victoria, 520,240 households were in mortgage stress and 533,789 were experiencing rental stress as of the September 2025 quarter, according to Digital Financial Analytics.
Nine months after interest-rate cuts began easing pressure on Victorian homeowners, shock new stats show more than 1 million households across the state are still struggling.
A whopping 520,000 Victorian households are in mortgage stress, with a similar number of rental homes also watching more money going out than coming in.
Agents on the coal face of the city’s housing market have warned surging insurance costs are chewing through savings on mortgage bills as interest rates fall, with even those in higher price brackets now buckling under sustained financial pain.
RELATED: Housing advocacy group calls for rent rise caps to help more Aussies
Analysis: RBA must act on mortgage stress | PropTrack Housing Affordability Report
Housing affordability: Calls for federal government to scrap key taxes amid mortgage stress
With rents still rising, albeit more slowly than in recent years, the state’s tenants are also facing the pinch with a whopping 15,683 in Melbourne’s CBD living in rental stress.
Research firm Digital Financial Analytics’ (DFA) report shows Melbourne’s 3000 postcode was Australia’s worst for rental stress in the September 2025 quarter.
And DFA data scientist and banking analyst Martin North said Victoria was one of Australia’s most-overall stressed states, with “fading” economic activity and lower home price growth.
Suburbs in Melbourne’s outer southeast, north and west, plus Ballarat, dominated the state’s list of areas most impacted by mortgage strain.
“Some new listings are concentrated in those high-stressed suburbs, suggesting the pressures are coming to a head,” Mr North said.
The DFA report was based on more than 52,000 Australian household surveys conducted in the year to September 30.
If households reported more financial outgoings than income, excluding one-off discretionary items, they were defined as stressed.
Melbourne’s 3000 postcode has 15,683 households experiencing rental stress, the Digital Financial Analytics’ (DFA) report states. Picture: Sarah Matray.
DFA data scientist and banking analyst Martin North says Australia’s rental stress rates are “way worse than mortgage stress” given low rental supply and rising rents. Picture: Hollie Adams/The Australian.
This week, homeowners hoping for a further rate cut in 2025 had their hopes dashed by an increase in inflation figures, which both the Real Estate Institute of Australia and financial comparison company Canstar have now warned means borrowers shouldn’t expect any more mortgage relief this year.
Budgeting and money management service MyBudget founder and director Tammy Barton said even a small reduction in home loan repayments could make a big difference to “households that are right on the edge” with the national situation the worst she had seen since the Covid pandemic.
Experts say mortgage and rental stress across Victoria has gotten steadily worse since interest rates began rising in 2022.
MyBudget founder and director Tammy Barton says everyday costs like food, insurance and utilities have all gone up, and combined with high mortgage repayments or rising rent, this means people are really feeling the squeeze at present. Photo: Naomi Jellicoe.
“A lot of households are stretched thin, even those who’ve never felt like they’ve struggled before,” she said
“Rental stress has also increased … We’re seeing more single parents and younger families struggling to keep up with rising rent and living costs.”
Ms Barton said financial pain could impact people’s mental health and overall wellbeing, with stress, anxiety, and depression often a result.
“Long-term, it (mortgage stress) can damage your credit score, limit future borrowing options, and delay achieving your financial goals,” she added.
“Understanding these impacts can help you take proactive steps to manage financial stress before it spirals.”
This four-bedroom house at 2 Greystone Place, Craigieburn, on the market with a $720,000- $760,000 range, is being offered as a mortgagee sale.
RT Edgar director Sarah Case said while reduced interest rates had on the surface been good news, most families were grappling with surging insurance bills for buildings, home and contents and owners corporations.
“And they are things you can’t control, you can shop around and try to get them cheaper – but most are at the same level,” Ms Case said.
It’s not just limited to battlers at the more affordable end of the market, with Ms Case representing homes across Melbourne’s most sought after suburbs in the inner east of Melbourne.
In the 2024-25 financial year, the National Debt Helpline responded to 6128 Victorian inquiries including 1576 who were people concerned about their mortgage.
The helpline is a free and confidential service for people experiencing financial difficulty, run by the Melbourne-based Consumer Action Law Centre.
The Consumer Action Law Centre’s Financial Counselling Practice assistant director Claire Tacon says mortgage stress is the number one reason for calls to the National Debt Helpline.
The centre’s Financial Counselling Practice assistant director Claire Tacon said while people often began experiencing financial difficulties due to illness, loss of a loved one or a relationship breakdown, there was a “new cohort of people who are working who have never been in financial hardship before”.
“Often they haven’t had a change in their circumstances – the income has remained fairly steady, but the interest rate rises and the other cost of living rises that we’ve seen have caused them to fall into financial hardship,” Ms Tacon said.
Before May 2022 when interest rates started rising, mortgage stress had never been the top presenting issue to the helpline, she added.
People struggling to pay rent or the mortgage often also have trouble meeting other household expenses too.
Mortgage Stress Victoria deputy chief executive and principal solicitor of mortgage stress, Jo Harris, said the organisation had dealt with a 22 per cent increase in cases between January and March 2025 when compared to the same time frame in 2024.
Funded by the state government, Mortgage Stress Victoria offers free help with services such as lawyers, financial counsellors and social workers to Victorians experiencing trouble paying their home loan.
Ms Harris said it was important for people having difficulty paying their mortgage to reach out to their lender for help earlier rather than later.
“The earlier they try and sort it out, the more options that there will be – don’t bury your head in the sand,” she said.
“I think it’s just really important that people understand that most lenders which have hardship teams are really willing to work with people.”
Ms Harris said the Australian Banking Code of Practice had been amended to include enhanced protections for vulnerable customers in February.
At Westjustice, which provides free legal help to people in Melbourne’s western suburbs,
the Economic and Housing Rights Program legal director Joe Nunweek said its Tenancy Stress Victoria program had assisted about 200 people going through rental stress since being established three years ago.
Mr Nunweek said although rent rises had eased somewhat compared to how fast they had grown in 2023, the Wyndham municipality in Melbourne’s outer west – which has one of Australia’s fastest-growing populations – was an area where many renters needed assistance.
According to DFA, more than 19,000 households in the Wyndham suburbs of Hoppers Crossing, Tarneit, Truganina, Werribee and Point Cook are in rental stress.
Experts encourage people having difficulty paying their home loan or rent to seek help as early as possible.
Mr Nunweek said some struggling households which used to buy now, pay later products might put the funds towards essentials such as groceries.
“And then probably the other sort of big factor, I suppose, is people do go without sometime,” he said.
“So it might be that kids’ clothing, nutrition and what they should be eating to stay well doesn’t necessarily stay the course.”
Mr Nunweek said for renters having trouble making ends meet, seeking help from a local service was important.
“They can start talking about some other budgetary things you could be saving on, or debts you could deal with that you don’t have to prioritise and you can become more aware of your legal rights,” he said.
4-6 Meadow Rd, Devon Meadows, has been listed with a $2.5m-$2.75m asking range. The six-bedroom house is the subject of a mortgagee sale.
ANZ’s managing director of home loans, Shannon McMahon, said financial stress could affect anyone.
He echoed that it was important for homeowners to ask for help as soon as possible.
“Whether it’s through payment relief, a loan contract variation, or access to financial wellbeing tools, our Financial Wellbeing Assist teams can work with customers to assess their circumstances and suggest a plan that meets their specific needs,” Mr McMahon said.
“For those looking to stay on top of their home loan, small changes can make a big difference – keeping repayments steady when interest rates fall and making extra contributions when possible can help to reduce the life of a loan and save on interest.”
Additional reporting by Aidan Devine and Nathan Mawby.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
MORE: Shocking daily rise in Aussie land prices set to worsen housing crisis
English (US) · 