As Australians recover from the Reserve Bank’s surprise decision to hit pause on rates, a survey has found recent cuts have provided relief for borrowers, with a fall in the number of households under mortgage stress.
The RBA defied widespread expectation of a third rate cut for 2025 last week, opting instead in a split decision to leave the official cash rate at 3.85 per cent.
The decision means mortgage-holders must wait at least until the central bank’s next meeting in August for further interest rate relief.
Meanwhile, a survey of 1000 people by comparison company Finder has revealed the number of borrowers who spend more than 30 per cent of their after-tax income on mortgage repayments has fallen from nearly 50 per cent in February to just over a third.
The definition of mortgage stress is when a large portion of your income – typically 30 per cent – is spent on your mortgage, leaving less for everyday expenses and unexpected costs.
The latest analysis by Finder revealed that definition covers 37 per cent of homeowners, compared to 47 per cent in February.
That’s 1.2 million borrowers who are still at risk of mortgage stress – down from 1.55 million earlier this year.
Finder’s most recent analysis showing almost one in five (19 per cent) spend more than 40 per cent of their household income on mortgage repayments.
Even more startling is that 7 per cent of borrowers have home repayments that soak up more than half of their incomes.
Meanwhile, Finder’s Consumer Sentiment Tracker reveals 13 per cent of households have missed at least one mortgage repayment in the past six months.
Despite the shocking statistics, Finder home loans expert Richard Whitten, said mortgage holders were under significantly less financial strain since the rate cuts in February and May.
“The loan to income ratio is improving, with thousands of homeowners getting relief when they need it most,” Whitten said.
“This shift marks a turning point – for the first time in years, many households are finally able to breathe financially.”
The survey found almost two-thirds of borrowers (63 per cent) were spending less than 30 per cent of their income on mortgage payments, compared to 53 per cent in February.
The average Australian home loan takes up 28 per cent of after-tax incomes – just below the recommended threshold of 30 per cent.
However, Whitten said many households would be relying on further rate cuts to ease financial pressure.
“Low mortgage stress doesn’t mean everyone is suddenly flush with cash,” he said.
“While the two rate drops so far in 2025 have provided some relief month to month, many families are still living pay cheque to pay cheque.
“The fact that over a million borrowers are still stretched shows we’re not out of the woods – but the worst may be behind us.”
Whitten encouraged borrowers to explore refinancing as lenders dropped their rates.
“Refinancing to a cheaper loan could put hundreds of dollars back in homeowners’ pockets each month – a simple move that can ease pressure and keep repayments on track,” he said.
This article first appeared on View.com.au. Read the original here
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