Broker Notes #12: Mortgage Stress Climbs to 1.6 Million as RBA’s August Call Remains Genuinely Split

Mortgage Stress Is Now at Its Highest Level in Two Years

Roy Morgan’s latest modelling shows 30.3% of mortgage holders were “at risk” of stress in the three months to June, up 1.3 percentage points on May and equivalent to 1,606,000 people, an increase of 68,000 on the previous month and 115,000 higher than a year earlier. It’s the fifth consecutive monthly rise and matches the level last seen in June 2024, just before tax cuts eased pressure on household budgets Australian Broker.

Within that figure, 1,096,000 mortgage holders, or 20.7%, are considered “extremely at risk,” well above the two-decade average of 16.4%. Roy Morgan CEO Michele Levine says employment and income matter more to that number than the cash rate alone, and flagged that the workforce has begun contracting after several years of steady job creation.

Levine modelled two scenarios for where stress could go next. A further 0.25 percentage point rise in August, taking the cash rate to 4.6%, would push the at-risk share to 31.2% or 1,653,000 people. A second rise in September to 4.85% would lift that to 31.4%, or 1,667,000 people, a level that would take rates to their highest point in nearly 20 years, since December 2008. On inflation, Levine pointed to a possible silver lining: headline CPI eased to 4.0% in the year to May, down 0.6 percentage points from 4.6% in March, though she cautioned that renewed tension in the Middle East could put that improvement at risk.

Is the RBA About to Hike Again? June’s Jobs Data Doesn’t Rule It Out

The Australian Bureau of Statistics’ June jobs report, released last week, showed unemployment steady at 4.4% on a seasonally adjusted basis, unchanged from May. The participation rate edged up to 67.0%, from 66.7% the month before Australian Broker. By state, New South Wales had the lowest unemployment rate at 4.0%, followed by Western Australia at 4.2%, while Victoria was highest at 5.1%.

ANZ economists Aaron Luk and Jasmine Zheng said the data is “unlikely to rule out the possibility of a further increase in interest rates if inflation risks remain elevated,” noting the labour market looks broadly steady and is unlikely, on its own, to stop the RBA tightening further if needed. Their base case is that the cash rate has peaked at 4.35%, but they don’t rule out a hike in November if price pressures persist beyond the August meeting.

The RBA delivered three back-to-back hikes earlier this year before holding rates at its June meeting, wanting more time to see how the earlier increases were flowing through the economy. The June quarter CPI print, due before the RBA’s 10 and 11 August meeting, will be the next major data point. Trimmed mean inflation, the RBA’s preferred measure of underlying price pressure, rose to 3.6% in the 12 months to May, up from 3.4% the month before, and remains above the central bank’s 2% to 3% target band.

Fewer Australians Are Applying for Home Loans, and Under-35s Are Pulling Back Hardest

Equifax’s Consumer Market Pulse for June shows national mortgage demand down 14% year-on-year, with no state or age group recording positive growth. The ACT posted the steepest fall at 18.6%, followed by Victoria at 15.9% and New South Wales at 15.0%, while Western Australia was the most resilient market with an 8.5% decline The Adviser.

Equifax chief solutions officer Kevin James said the retreat is clearest among younger borrowers, with new mortgage applications from the 26 to 35 age group effectively hitting a wall, down 20.5%. First home buyer demand fell 17.2% nationally, with Queensland first home buyers pulling back 20.8% and Victorian first home buyers down 18.2%. Refinancing has cooled too: switching with the same lender fell 10.4% year-on-year, and switching to a different lender fell 15.1%.

James describes the shift as households moving from “proactive risk management” earlier in the year to a “far more conservative, defensive approach to borrowing,” driven by the combination of persistent cost-of-living pressure and a sustained high cash rate. Borrowers aged 56 and over are the exception, tracking modest growth in both auto loans and personal loans, a group James says holds more unencumbered wealth and lower debt leverage. For anyone assuming a quiet market means less competition for pre-approval, the reality is closer to the opposite: with fewer active borrowers, lenders are competing harder for the applications that do come through.

Perth Prices Keep Breaking Records, Even as Brisbane and Adelaide Buyers Get More Choice

Perth’s property boom pushed a record 38 suburbs into the million-dollar bracket for houses in just six months, according to the Real Estate Institute of Western Australia. That’s more new entrants in six months than the previous 12-month record of 34. Across the city, 167 suburbs, 41.4% of the total, now have a median house price of $1 million or more, up from just 42 suburbs, or 10.4%, five years ago Australian Broker. Embleton was the standout, with its median house price up 29.9% over the year to $1,078,500.

That growth cuts both ways for buyers. Under the federal 5% Deposit Scheme, Perth’s price cap sits at $850,000, so suburbs newly crossing the million-dollar mark now sit above the cap for scheme-eligible buyers without a larger deposit. REIWA president Suzanne Brown says the pace is already moderating, with quarterly growth slowing from 5.3% in the first quarter to 3.9% in the June quarter, and expects fewer new entrants when the list is reviewed again in early 2027.

Elsewhere, buyers are catching more of a break. New listings in June were up 22% year-on-year in Brisbane, 25% in Perth, and 18% in Adelaide, according to PropTrack analysis of realestate.com.au data. All three cities saw prices climb 13% to 21% over 2025 while stock stayed tight, so the lift in choice is a meaningful shift, even if it isn’t yet a genuine buyer’s market. Total active listings remain well below pre-pandemic norms, just 11% above year-ago levels in Brisbane and Adelaide and only 2% higher in Perth, and PropTrack senior economist Angus Moore says spring will be the real test of whether the improved supply holds.

A New Fee Is About to Make Company and Trust Loans More Expensive

Investors borrowing through a company or trust structure are about to face a fresh cost. A major lender has confirmed a new $2,500 fee on new company and trust loan applications from 30 July 2026, alongside an increase to its annual package fee from $349 to $415 and its discharge fee from $390 to $490, both effective 25 August. None of the changes affect existing loans already settled under the current fee schedule.

Structure decisions like these carry weight beyond the upfront cost. Investors who set up loans and ownership structures without factoring in fees, tax treatment, and borrowing capacity from the start often find those choices expensive to unwind later, particularly once cross-collateralisation or trust-related tax questions are involved. A $2,500 application fee is a meaningful addition to the cost of establishing a company or trust loan, and it’s a detail worth working through with a broker and accountant before an application is lodged, rather than after settlement, given the tax and compliance implications a trust or company structure can carry.

For investors already mid-application, the effective date matters: anything not submitted before 30 July will fall under the new fee. It’s a reminder that structure-related costs move independently of the cash rate, and that the fine print on entity lending is changing as often lately as the pricing on standard owner-occupier loans.