Rising inflation and interest rates continue to place pressure on the cost of living, leaving many mortgage holders feeling negatively towards their financial outlook.
Four in five mortgage broker members are feeling either neutral or negative about finances, the Mortgage & Finance Association of Australia’s (MFAA) latest market sentiment survey found.
The research – conducted among MFAA member brokers in February – shows borrower trends, shifts in market conditions, and how borrowers are responding to current economic conditions across a range of states and territories.
MFAA chief executive Anja Pannek noted how much economic conditions had changed since the last survey in 2025, adding the findings shed light on how borrower behaviour will be impacted moving forwards.
Borrower confidence has weakened across Australia, the survey shows, with housing pressures varying across the states and territories as different parts of the market are move at very different speeds.
“Inflation remains above the RBA’s target 2 to 3% range and cost-of-living and housing supply challenges persist," Ms Pannek said.
Australia's housing market is under severe pressure, experts say. Picture: Getty
The findings from the national survey note the fragmented housing market is increasingly operating as a 'five-speed economy'.
In Australia, this happens when interest rates hit borrowing capacity unevenly, cheaper areas begin to outperform in terms of affordability, and population growth and migration provide boosts to some areas at random.
Supply shortages and new home building can also have an impact.
“Borrowers across the country are experiencing very different conditions depending on where they live," MFAA chief executive Anja Pannek said.
MFAA chief executive Anja Pannek. Picture: Supplied
"We see strong optimism in some states, but there are supply constraints and affordability pressures in others, which will only be exacerbated by skyrocketing oil prices.”
Queensland borrowers the most positive
When it came to borrower sentiment, there were major differences revealed across the country reflecting varying housing supply, affordability and cost-of-living pressures.
Queensland led the pack for the strongest levels of positive sentiment, with brokers reporting one in four clients felt positive about their financial outlook (25.4%) versus just 14.8% positivity in South Australia and the Northern Territory (NT), and 18.7% in Victoria.
Brokers reported the confidence was linked to strong existing property equity among homeowners, healthy employment and income conditions.
Brisbane, Queensland. Picture: News Corp Australia
Queensland-based Mortgage Choice broker Caroline Jean-Baptiste said the findings were of no surprise as she had seen a lot of positivity in her local market, and caution amongst borrowers had only just recently begun.
“We've seen a lot of activity in the market recently where people are just buying and think they’re going to miss out with Olympics down the track,” she says.
“People are worried about their jobs though, and it's only in say, the last three months that people have seen their redundancies come through and then the difficulty in actually replacing their jobs (becomes evident).”
“They are getting lump sums, but we're getting more discussion about where to put it and how to handle it, and kind of how long it will last them.”
Varying degrees of confidence
Western Australia (WA) recorded the highest levels of negative sentiment at 28.2%, with housing supply constraints, limited availability of suitable property and interest rates cited as key drivers, which all place upward pressure on prices and affordability.
It's an unsurprising finding in the increasingly expensive state, with the latest PropTrack Home Price Index showing home in WA are 16.9% more expensive than they were 12 months ago.
As of March, the median price of a home in Perth is now $1,012,000, marking the first time the country's third most expensive city has cracked that $1m mark.
In Victoria, borrowers were most likely to report neutral sentiment, reflecting the uncertainty that many in the state feel about their economy, and how future interest rate movements or employment change might affect their ability to meet repayments.
Borrowers in Victoria were most likely to report neutral sentiment. Picture: Supplied
South Australian and NT borrowers reported high neutral sentiment due to cost-of-living concerns, interest rates and housing supply.
There was mixed sentiment amongst borrowers in New South Wales and the Australian Capital Territory, which was deemed as a result of the broad differences in housing costs between Sydney and regional areas.
Interest rate outlook
On a positive note, brokers reported fewer borrowers were seeking hardship-related support, suggesting many households have adjusted to higher interest rates.
The Reserve Bank hiked interest rates in February and in March and is widely tipped to add a further 0.25 percentage points to the 4.1% rate next month.This would bring the cash rate to the highest it has been since the Global Financial Crisis.
Amid rising pressures, 92% of brokers surveyed by the MFAA said they are helping clients refinance for the first time.
While refinancing is often cited as the next step for borrowers looking to find cheaper home loans when rates rise, 79% of brokers said serviceability requirements still prevented the same or more clients from refinancing.
This is an increase of 71.8% compared to six months ago, suggesting some borrowers could effectively be locked out of refinancing despite wanting to switch lenders.
Amid the complexity of Australia’s housing market in 2026, Ms Pannek said borrowers continued to rely on mortgage brokers to help navigate the increasingly complex lending landscape.
“Today’s lending environment presents borrowers with a dizzying range of lenders, products and policies,” Ms Pannek said.
“This is great for competition, but it can be confusing for consumers. Brokers help Australians in every city, region and town to navigate complexity and make informed decisions about the biggest financial commitment they will ever make.”
Ms Jean-Baptiste said borrowers concerned about managing their mortgage repayments should enlist the help and advice of their broker.
“I would also say look at your current spending," she says. "Look at where your money's gone in the last three months, and then prioritise your spending. All that discretionary spending, that's what you need to review.”
This article first appeared on Mortgage Choice and has been republished with permission.
English (US) · 