Rising Interest Rates and Financial Struggles
More than 65,000 Australians have reached out to the National Debt Helpline in financial distress since the start of the year. Many of these individuals are struggling with their home loan payments. The Reserve Bank recently increased interest rates for the third time this year, raising the official cash rate from 4.10 per cent to 4.35 per cent. This decision has left many borrowers concerned about how they will manage their budgets, which are already tight.
Bianca Gambrill, a teacher from Newcastle in New South Wales, has seen her mortgage repayments increase by more than $600 every two weeks since she bought her home during the COVID-19 pandemic. She described the challenge of making these payments as increasingly difficult. “We make the minimum repayments … which means, because we didn’t buy until our 40s … if we keep at this rate, we’re paying off our home loan into our 70s,” she explained to the ABC.
Recently, Ms. Gambrill had to use a credit card to cover her dog’s veterinary bills, and she is still unable to pay it off. “We went into quite significant credit card debt to do it, so I’ve got a $10,000 credit card debt there in order to meet those medical bills,” she said. The stress of this situation has led to difficult conversations about their finances, as all of their money is going towards the mortgage.
Ms. Gambrill, who was diagnosed with ADHD as an adult, also mentioned that rising interest rates are affecting when she can afford to buy her medication. “This year I’ve had to go off meds during school holidays so I can stretch them out as they are too expensive,” she said.
Growing Concerns and Increasing Calls
Financial counsellors note that as interest rates rise, it is not just vulnerable people but also many employed individuals and young families who are feeling the impact. Data shows that in April 2026, there were 13,933 calls to the National Debt Helpline, compared to 11,554 callers in April 2025. The latest interest rate hike is expected to push more Australians into housing stress, according to financial counsellors.
The majority of those contacting the helpline over the past few months are facing mortgage stress, where more than 30 per cent of their income is spent on home loan payments. Other reasons for contacting the helpline include credit card debt, electricity bills, debts owed to the Australian Taxation Office (ATO), and personal loans.
Financial counsellors also highlight the rising cost of fuel as a major issue, especially for people in rural and remote areas. Domenique Meyrick, CEO of Financial Counselling Australia, noted that this has been the busiest start to the year. “If we compare it to last April, we’ve had a 21 per cent increase in calls and a 45 per cent increase in people using the chat function. That’s a significant increase,” she said.
Diverse Demographics Facing Financial Challenges
Ms. Meyrick added that recent data showed 41 per cent of people contacting the National Debt Helpline were in some type of employment: 28 per cent in full-time work and 14 per cent in part-time work. She also mentioned that 34 per cent had dependents and 27 per cent were in the 35–44 age bracket. “People in full-time employment, people in part-time employment, people with children, people from all the parts of our community are really doing it tough at the moment.”
“For that group of people who are already in financial difficulty and have a mortgage, an interest rate hike always stings. For some people, it [the latest rate hike] will be the straw that broke the camel’s back.”
Prioritizing Housing Over Essentials
As fears of a recession grow, Ms. Meyrick noted that people are avoiding defaulting on their mortgages by cutting back on other essentials. “A lot of people will prioritise their housing over everything else, so they will not pay their telephone bills or their energy bills, they’ll go without meals, they will skip medical appointments,” she said. “They do pretty much whatever they can to make sure they meet those housing costs and so, by the time people have come to seek the support of a financial counsellor, often … they’ve got no discretionary spending at all.”
Counsellors and banks advise people facing difficulty making mortgage repayments to reach out to their lenders for help. “Pick up the phone and call your bank early and say, ‘Hey, I’m on the edge of financial difficulty. I need some support here.’ Ask for hardship [relief],” she said.
Widespread Risk of Mortgage Stress
Separate data from Roy Morgan in late April showed that with the RBA raising the cash rate to 4.35 per cent, the share of borrowers “at risk” of mortgage stress was forecast to rise to 30.4 per cent, equivalent to 1.64 million people. If the RBA raises rates again in June by 0.25 percentage points to 4.6 per cent, the share of borrowers at risk will increase to 30.9 per cent, equivalent to 1.67 million people, up 219,000 from before the May and June rate hikes.
Roy Morgan’s data considers borrowers at risk if they are paying more than a certain proportion of their after-tax household income (25–45 per cent depending on income and spending) into their home loan. Michele Levine, chief executive of Roy Morgan, said it was not interest rates but unemployment that had the biggest impact on income and mortgage stress. “It’s if they lose their job or main source of income,” she said, adding that an ongoing war in the Middle East would increase inflation.
Banks Encourage Early Communication
Major banks encourage people in distress to get in touch early. ANZ’s chief financial officer, Farhan Faruqi, mentioned that mortgage customers’ delinquencies decreased three basis points in the half to 83 basis points. “Our mortgage customers continue to show resilience, with 88 per cent of accounts ahead on repayments, and approximately 70 per cent of customers holding savings buffers of three months or more,” he said.
He added that the bank had not seen a material increase in customer requests for hardship relief but was “very conscious of the stress from higher interest rates and cost-of-living pressures” and was closely monitoring it. A Westpac spokeswoman stated that 85 per cent of customers were ahead on their mortgage repayments. Only 0.53 per cent of people in Westpac’s total mortgage portfolio of $518 billion (excluding its RAMS business) were experiencing financial hardship, and the bank was offering options for them, including deferred or reduced repayments.
Of those in a hardship arrangement, the most common support provided was a temporary pause on repayments (66 per cent) or temporary reduced repayments (16 per cent).
Property research group Cotality could not provide data on distressed home sales but noted a more obvious trend towards auctions being withdrawn from the market prior to going ahead. This week, preliminary numbers showed 18.3 per cent of auctions were withdrawn without a rescheduled date. Cotality suggested that the increase in withdrawn auctions likely represents less confidence from sellers to test the market under auction conditions, probably due to low numbers of registered bidders leading up to the auction event, or feedback from the market that vendor price expectations would not be achieved.
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