What is the mortgage arrears rate in Australia in 2026?

APRA's December 2025 quarterly ADI property exposures statistics, published on 12 March 2026, showed loans 30-89 days past due at 0.47% of residential mortgages and non-performing housing loans at 0.99%. Those figures indicate stress has risen from the 2022 lows but remains low by historical Australian standards.

Are Australian mortgage arrears rising or falling in 2026?

On APRA's December 2025 data, short-term arrears were lower than a year earlier, with loans 30-89 days past due falling from 0.59% to 0.47%, and non-performing housing loans easing from 1.05% to 0.99%. The RBA's March 2026 Financial Stability Review said housing loan credit quality had stabilised after mild deterioration over the prior two years.

What share of new Australian home loans are high debt-to-income in 2026?

APRA reported that 6.8% of new residential loans funded in the December 2025 quarter had a debt-to-income ratio of 6 times or more. It also reported separate December 2025 figures of 4.0% for new owner-occupier lending and 11.3% for new investor lending at DTI 6x or higher.

What should Australian borrowers do if they are about to miss a mortgage repayment in 2026?

The best first step is to contact the lender before the due date or as soon as the problem is obvious. Australian lenders can offer hardship support such as temporary repayment reductions, short deferrals, interest-only periods or restructuring, but help is easier to arrange early. Waiting until arrears have compounded usually reduces your options.

How much buffer should Australian mortgage borrowers keep in 2026?

There is no legal minimum, but many borrowers aim for at least 3 months of essential expenses or 3 months of mortgage repayments in accessible cash. For a $4,200 monthly mortgage repayment, that means keeping roughly $12,600 as a starting emergency buffer, and more if your income is variable.

Mortgage Arrears and Hardship in Australia in 2026: What APRA and the RBA Say Borrowers Should Watch

Mortgage Stress Is Real, but the National Picture Is More Nuanced Than the Headlines

If you only follow property headlines, it is easy to think Australian mortgage borrowers are either doing perfectly fine or on the edge of collapse. Neither view is especially useful.

The more credible picture comes from APRA and the RBA. Their latest 2026 material shows that pressure on households is genuine, but widespread mortgage failure has not materialised. Arrears rose from the unusually low post-pandemic period, then broadly stabilised.

That distinction matters. A household under pressure does not need a panic headline. It needs clear numbers, realistic warning signs and a plan.

The Key Australian Mortgage Risk Numbers Right Now

APRA’s quarterly ADI property exposures statistics for the quarter ended 31 December 2025, published on 12 March 2026, give the clearest official snapshot of housing loan quality across authorised deposit-taking institutions.

Residential mortgage metric	December 2024	December 2025	Change
Total credit outstanding	$2,322.2bn	$2,475.0bn	+6.6%
Owner-occupied loans share	67.7%	67.2%	-0.44 pts
Investment loans share	30.4%	30.8%	+0.39 pts
Loans with LVR 80%+	17.4%	16.9%	-0.46 pts
Loans 30-89 days past due	0.59%	0.47%	-0.12 pts
Non-performing loans	1.05%	0.99%	-0.07 pts

APRA also reported strong new lending growth.

New lending metric	December 2024	December 2025	Change
New loans funded	$179.9bn	$217.6bn	+20.9%
New owner-occupied loans share	63.4%	61.8%	-1.54 pts
New investment loans share	34.4%	35.9%	+1.44 pts
New loans with LVR 80%+	31.0%	32.2%	+1.14 pts
New loans with DTI 6x+	5.8%	6.8%	+1.03 pts
New owner-occupier loans with DTI 6x+	n/a	4.0%	n/a
New investor loans with DTI 6x+	n/a	11.3%	n/a

Those numbers tell us three useful things straight away.

First, the stock of housing loans is still expanding. Second, arrears remain low at a system level. Third, risk has not disappeared, especially in investor lending and higher-debt households.

What the RBA Said in March 2026

The RBA’s March 2026 Financial Stability Review said credit quality stabilised in 2025 after a mild deterioration over the previous two years. It specifically noted that the stabilisation was largely driven by housing loans, as some budget pressure from inflation and higher interest rates eased and unemployment remained low.

That is encouraging, but the RBA did not say borrowers are comfortable. It said the system is resilient.

The same review also noted:

over 90% of housing non-performing loans were considered well secured in December 2025
banks’ Common Equity Tier 1 capital ratio was 12.3% in December 2025
overall bank capital and provisioning remain strong

For borrowers, the main takeaway is this: the banking system can absorb stress, but that does not spare an individual household from hardship.

Why Arrears Are Still Low Even After Higher Rates

A lot of households expected a wave of defaults once repayments reset higher. That did not happen on a national scale, mainly because several buffers softened the hit.

1. Labour market conditions stayed better than feared

Borrowers can survive a much higher repayment if income keeps arriving. Loss of income is still the biggest trigger for serious arrears.

2. Many borrowers built savings buffers earlier

Some households accumulated extra cash during the low-rate years, especially during the pandemic period. Those buffers have been drawn down, but they helped many borrowers avoid immediate delinquency.

3. Property values remained strong in many markets

That reduced negative equity risk and made it easier for some households to sell or refinance before things got worse.

4. Lenders offered hardship support earlier than in prior cycles

Banks are generally more active now in contacting stressed borrowers, restructuring terms and offering temporary assistance.

5. Most borrowers were assessed at rates above their initial contract rate

Serviceability buffers did not eliminate stress, but they did stop some of the weakest loans from being written in the first place.

Low National Arrears Do Not Mean Low Household Stress

This is where people can get tripped up. A national arrears figure below 1% can coexist with a lot of real pain.

Imagine a household with:

combined after-tax income of $9,200 a month
mortgage repayment of $4,450 a month
childcare of $1,700 a month
groceries of $1,250 a month
transport and fuel of $650 a month
insurance, rates and utilities of $1,050 a month

That leaves just $100 a month before school costs, medical bills, subscriptions, repairs and irregular expenses.

A single shock, overtime lost, an appliance replacement, a dental bill, a car repair, can push that household into missed payments, even if it looked serviceable on paper at application stage.

The Most Important Early Warning Signs

Borrowers usually do not go from comfortable to 90 days in arrears overnight. The warning signs tend to show up earlier.

H3 1. Your savings balance is falling every month

If you are covering ordinary bills by drawing down cash reserves, the issue is already in motion.

H3 2. You are rolling balances on credit cards

A household that starts financing groceries, school costs or utility bills on revolving credit is often masking mortgage stress.

H3 3. You are paying late, even if you are still paying

Late direct debits, bounced payments and repeated overdraft use are all early markers.

H3 4. You are avoiding lender contact

Once borrowers start ignoring calls, the problem usually becomes harder and more expensive to solve.

H3 5. You no longer know your exact cash position

If you cannot say what is in the offset, what is due this month and what the next three major bills are, you are flying blind.

Investors Face a Different Set of Risks

APRA’s December 2025 data showed the share of new investment lending rose to 35.9% of new loans funded, and 11.3% of new investor loans had a debt-to-income ratio of 6 times or more.

That does not automatically mean investor lending is reckless. But it does tell us investor leverage remains a point to watch.

Investors can run into trouble when multiple pressures hit at once:

higher variable rates
insurance increases
land tax
maintenance bills
vacancy periods
lower-than-expected rent growth
tighter refinancing rules

A geared investor property might still look fine on a spreadsheet if rent is $780 a week and annual non-interest costs are manageable. But if rates, insurance and repairs together add $8,000 to $12,000 a year to holding costs, the cash flow changes fast.

Why APRA’s DTI Limits Matter in 2026

APRA said it activated debt-to-income limits from February 2026, restricting the share of new lending at high DTI, defined as six times income or greater, separately for investor and owner-occupier lending.

This is important because DTI is one of the better predictors of vulnerability when rates stay higher for longer.

A simple example:

Gross household income	DTI	Approximate debt level
$140,000	4x	$560,000
$140,000	5x	$700,000
$140,000	6x	$840,000
$140,000	7x	$980,000

Once debt climbs from 4x to 6x or 7x income, the household has much less room to absorb life events. The same rate rise, job change or vacancy period hurts more.

What to Do Before You Miss a Repayment

If you think you might miss a repayment in the next one to three months, the best move is to act before the formal arrears clock starts.

H3 1. Call the lender early

Say clearly what changed, income drop, expense spike, separation, business slowdown, illness, tenant vacancy, whatever the issue is. Early contact gives lenders more room to help.

H3 2. Prepare a one-page cash flow summary

List:

net monthly income
mortgage repayment
essential expenses
available cash buffer
unsecured debts
likely duration of the problem

H3 3. Ask about hardship options

These may include:

short repayment deferral
temporary interest-only period
reduced repayments for a set period
restructuring the loan term
capitalising arrears in limited cases

H3 4. Cut large leaks, not just small subscriptions

Cancelling two streaming services saves a bit. Repricing insurance, changing childcare patterns, selling a second car, or refinancing expensive unsecured debt often saves more.

H3 5. Review refinance options before your file deteriorates

Once missed payments are recorded, your options usually narrow.

A Practical Mortgage Triage Framework

Here is a simple way to grade your situation.

Risk level	Typical signs	Suggested action
Green	Repayments manageable, buffer intact, no late bills	Keep monitoring, maintain offset and emergency fund
Amber	Savings falling, card use rising, one-off pressure building	Rework budget, price-check lender, build 90-day plan
Red	Likely missed repayment within 30-60 days, debt juggling, arrears starting	Contact lender immediately, request hardship review, get broker/accountant help
Critical	Multiple missed repayments, legal notices, no cash buffer	Urgent hardship escalation, restructuring advice, consider sale strategy if needed

That table is simple on purpose. Most borrowers do not need theory. They need clarity.

How Big a Buffer Should Borrowers Hold?

There is no perfect number, but a good baseline is three months of mortgage repayments plus at least some provision for essential living costs.

Examples:

Monthly mortgage repayment	3-month mortgage buffer	6-month mortgage buffer
$2,800	$8,400	$16,800
$3,500	$10,500	$21,000
$4,200	$12,600	$25,200
$5,000	$15,000	$30,000

If your income is variable, self-employed, commission-based or exposed to overtime, you probably want the higher end of that range.

Should You Refinance, Fix, or Sit Tight?

That depends on your actual numbers, not the headline rate alone.

A refinance might help if:

your current lender has allowed your variable rate to drift above market
you can consolidate to a lower total interest cost
your cash flow is still strong enough to pass servicing

Staying put might make sense if:

your lender is competitive already
refinance costs outweigh short-term savings
your position is too close to hardship for a new lender to approve

A split or partial fix might help if:

you need certainty over part of the payment
you want some protection while keeping offset flexibility on the variable portion

The mistake is waiting until a mild cash flow problem becomes a credit-quality problem.

What Borrowers Should Watch Over the Next 6 to 12 Months

The next phase of risk probably will not come from one single headline. It will come from combinations.

Borrowers should pay close attention to:

whether their lender passes through future rate changes quickly
whether household insurance, council rates and strata costs keep rising faster than wages
whether job security in their industry is weakening
whether tenant demand stays strong if they own an investment property
whether they are still refinanceable under current servicing rules

A borrower who is current on repayments today can still be exposed if their margin is thin. For example, a household with a $4,000 monthly repayment and only $600 of monthly free cash flow has just 15% breathing room. One renewal in home insurance, one change in school fees, or one month of reduced commissions can wipe that out. Watching the margin matters more than arguing about whether the national arrears rate is low or high.

Final Takeaway

Australia’s mortgage market in 2026 is under pressure, but it is not breaking.

APRA’s latest official data shows:

0.47% of housing loans were 30 to 89 days past due
0.99% were non-performing
new lending remains strong at $217.6 billion for the December 2025 quarter
higher-risk new lending still exists, especially in the investor segment

The RBA’s March 2026 assessment is that credit quality has stabilised, and the banking system remains resilient. But that does not mean every household is okay.

If your savings are slipping, your card balances are climbing, or your next repayment feels uncertain, treat that as an early warning, not a private failure. The earlier you act, the more options you usually keep.

Need Help Reviewing Your Loan Before It Turns Into a Bigger Problem?

If you want help comparing lenders, reviewing your refinance options, or understanding whether your cash flow problem is fixable now, find a verified mortgage broker on WealthWorks. If the issue overlaps with investment property cash flow, tax or business income, you can also find an accountant on WealthWorks.