Australia’s housing dream is rapidly turning into a nightmare for almost two million households, with new data revealing a terrifying surge in mortgage stress that experts warn could fuel a rise in crime and family violence.

Despite recent RBA rate cuts, the relief is proving to be a mere band-aid on a bullet wound, as the relentless cost of living crisis wipes out any financial reprieve, forcing some desperate homeowners into a dangerous spiral of further credit debt.

The grim reality is laid bare by Digital Finance Analytics (DFA), showing a staggering 1,865,868 households nationally are grappling with mortgage stress.

The situation is particularly dire in Tasmania, where 56.9 per cent of property owners are struggling to meet their household debt obligations.

South Australia isn’t far behind at 52.7 per cent, followed closely by Victoria (52.4 per cent), Western Australia (51.5 per cent), and New South Wales (51.2 per cent).

Even Queensland (43.2 per cent), the Northern Territory (42.2 per cent), and the ACT (39.7 per cent) are feeling the intense squeeze.

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AUSTRALIA’S TOP MORTGAGE STRESS SUBURBS

DFA data scientist and banking analyst Martin North painted a chilling picture of the consequences.

“This is because of a concentration of new purchasers, especially first time buyers, plus home and land packages which tend to have high loan to value loans. Other areas are also seeing pressure, though,” he said.

“(Mortgage) stress shows households have cash flow pressure, so they cut back on spending, and hunker down, leading to lower economic activity. If this continues some people may eventually default on their mortgage, but this process takes a long time, and banks try to ‘extend and pretend’ by extending loan terms or offering interest only,” he explained.

“(It also means) more people (are) working more jobs, more social pressure, and eventually higher crime and family violence.

“High stress also tends to limit future price growth, to some extent and banks sometimes reduce their willingness to lend. This can create no-go zones.”

The latest Consumer Stress Barometer from illion, an Experian company, corroborates the escalating crisis, revealing that default mortgage-holder risk in Victoria has surged by 7 per cent in the June quarter, with Western Australia also seeing a 1 per cent rise.

While New South Wales, South Australia, and Queensland saw marginal improvements, the national relative default risk has still climbed by 1 per cent.

Barrett Hasseldine, head of data science at Experian, confirmed the severity of the situation. “We’ve been putting together this stress barometer for a number of years now and the thing that stuck out the most for me is the insights we’re seeing in our data over the past quarter. (They) are showing the greatest, most elevated level of credit stress among consumers since Covid,” he said.

Mr Hasseldine highlighted a worrying trend of people resorting to credit cards to survive. “Earlier this year, we saw an increase in the number of people taking out credit cards,” he said.

“We’ve seen that drop since then but those were probably taken out to help households to make ends meet because of the increased costs, which have for many households been outstripping wage growth.

“We’ve now started to see many of those credit cards start to fall behind on their repayments. We’re starting to see that some of those missed payments are worsening, because obviously, mortgage stress has gone up.”

The data paints an even more alarming picture at a local level.

In New South Wales, a staggering 100 per cent of homeowners in Campbelltown, Riverstone, and Lane Cove, along with Berwick in Victoria, are currently experiencing some form of mortgage stress, meaning their spending is consistently eating into their savings.

Queensland’s hotspots include Geebung (93.9 per cent) and Pine Mountain (90.9 per cent), while Paralowie in South Australia sees 89.5 per cent of homeowners under pressure. Tasmania’s Riverside is also deeply affected, with 83.3 per cent of homeowners in stress.

The outlook offers little comfort.

Australia’s four major banks are forecasting that the Reserve Bank will keep the interest rate on hold at 3.6 per cent in November and December.

There may be no further cuts until mid-2026, meaning millions of Australians face a prolonged period of financial hardship.

“The cash rate coming down will absolutely help in terms of being able to help mortgage holders stay on top of their repayments,” Mr Hasseldine acknowledged.

However, he also warned of a potential double-edged sword: “That does mean that spending increases again, which could lead to rental prices going up again more quickly and the cost of goods going up more quickly again, increasing (financial) stress. So I think (another rate) cut would help but I don’t think there’s a silver bullet.”

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Nine months after interest-rate cuts began easing pressure on Victorian homeowners, shock new stats show more than 1 million households across the state are still struggling.

A whopping 520,000 Victorian households are in mortgage stress, with a similar number of rental homes also watching more money going out than coming in.

Agents on the coal face of the city’s housing market have warned surging insurance costs are chewing through savings on mortgage bills as interest rates fall, with even those in higher price brackets now buckling under sustained financial pain.

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With rents still rising, albeit more slowly than in recent years, the state’s tenants are also facing the pinch with a whopping 15,683 in Melbourne’s CBD living in rental stress.

Research firm Digital Financial Analytics’ (DFA) report shows Melbourne’s 3000 postcode was Australia’s worst for rental stress in the September 2025 quarter.

And DFA data scientist and banking analyst Martin North said Victoria was one of Australia’s most-overall stressed states, with “fading” economic activity and lower home price growth.

Suburbs in Melbourne’s outer southeast, north and west, plus Ballarat, dominated the state’s list of areas most impacted by mortgage strain.

“Some new listings are concentrated in those high-stressed suburbs, suggesting the pressures are coming to a head,” Mr North said.

The DFA report was based on more than 52,000 Australian household surveys conducted in the year to September 30.

If households reported more financial outgoings than income, excluding one-off discretionary items, they were defined as stressed.

This week, homeowners hoping for a further rate cut in 2025 had their hopes dashed by an increase in inflation figures, which both the Real Estate Institute of Australia and financial comparison company Canstar have now warned means borrowers shouldn’t expect any more mortgage relief this year.

Budgeting and money management service MyBudget founder and director Tammy Barton said even a small reduction in home loan repayments could make a big difference to “households that are right on the edge” with the national situation the worst she had seen since the Covid pandemic.

“A lot of households are stretched thin, even those who’ve never felt like they’ve struggled before,” she said

“Rental stress has also increased … We’re seeing more single parents and younger families struggling to keep up with rising rent and living costs.”

Ms Barton said financial pain could impact people’s mental health and overall wellbeing, with stress, anxiety, and depression often a result.

“Long-term, it (mortgage stress) can damage your credit score, limit future borrowing options, and delay achieving your financial goals,” she added.

“Understanding these impacts can help you take proactive steps to manage financial stress before it spirals.”

RT Edgar director Sarah Case said while reduced interest rates had on the surface been good news, most families were grappling with surging insurance bills for buildings, home and contents and owners corporations.

“And they are things you can’t control, you can shop around and try to get them cheaper – but most are at the same level,” Ms Case said.

It’s not just limited to battlers at the more affordable end of the market, with Ms Case representing homes across Melbourne’s most sought after suburbs in the inner east of Melbourne.

In the 2024-25 financial year, the National Debt Helpline responded to 6128 Victorian inquiries including 1576 who were people concerned about their mortgage.

The helpline is a free and confidential service for people experiencing financial difficulty, run by the Melbourne-based Consumer Action Law Centre.

The centre’s Financial Counselling Practice assistant director Claire Tacon said while people often began experiencing financial difficulties due to illness, loss of a loved one or a relationship breakdown, there was a “new cohort of people who are working who have never been in financial hardship before”.

“Often they haven’t had a change in their circumstances – the income has remained fairly steady, but the interest rate rises and the other cost of living rises that we’ve seen have caused them to fall into financial hardship,” Ms Tacon said.

Before May 2022 when interest rates started rising, mortgage stress had never been the top presenting issue to the helpline, she added.

Mortgage Stress Victoria deputy chief executive and principal solicitor of mortgage stress, Jo Harris, said the organisation had dealt with a 22 per cent increase in cases between January and March 2025 when compared to the same time frame in 2024.

Funded by the state government, Mortgage Stress Victoria offers free help with services such as lawyers, financial counsellors and social workers to Victorians experiencing trouble paying their home loan.

Ms Harris said it was important for people having difficulty paying their mortgage to reach out to their lender for help earlier rather than later.

“The earlier they try and sort it out, the more options that there will be – don’t bury your head in the sand,” she said.

“I think it’s just really important that people understand that most lenders which have hardship teams are really willing to work with people.”

Ms Harris said the Australian Banking Code of Practice had been amended to include enhanced protections for vulnerable customers in February.

At Westjustice, which provides free legal help to people in Melbourne’s western suburbs,

the Economic and Housing Rights Program legal director Joe Nunweek said its Tenancy Stress Victoria program had assisted about 200 people going through rental stress since being established three years ago.

Mr Nunweek said although rent rises had eased somewhat compared to how fast they had grown in 2023, the Wyndham municipality in Melbourne’s outer west – which has one of Australia’s fastest-growing populations – was an area where many renters needed assistance.

According to DFA, more than 19,000 households in the Wyndham suburbs of Hoppers Crossing, Tarneit, Truganina, Werribee and Point Cook are in rental stress.

Mr Nunweek said some struggling households which used to buy now, pay later products might put the funds towards essentials such as groceries.

“And then probably the other sort of big factor, I suppose, is people do go without sometime,” he said.

“So it might be that kids’ clothing, nutrition and what they should be eating to stay well doesn’t necessarily stay the course.”

Mr Nunweek said for renters having trouble making ends meet, seeking help from a local service was important.

“They can start talking about some other budgetary things you could be saving on, or debts you could deal with that you don’t have to prioritise and you can become more aware of your legal rights,” he said.

ANZ’s managing director of home loans, Shannon McMahon, said financial stress could affect anyone.

He echoed that it was important for homeowners to ask for help as soon as possible.

“Whether it’s through payment relief, a loan contract variation, or access to financial wellbeing tools, our Financial Wellbeing Assist teams can work with customers to assess their circumstances and suggest a plan that meets their specific needs,” Mr McMahon said.

“For those looking to stay on top of their home loan, small changes can make a big difference – keeping repayments steady when interest rates fall and making extra contributions when possible can help to reduce the life of a loan and save on interest.”

Additional reporting by Aidan Devine and Nathan Mawby.

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Melbourne Cup connections go way back in Geelong, but there are still ways for people to enjoy the romance of Australia’s greatest race themselves.

Some of the biggest names in the thoroughbred racing are based in the region, on farming properties such as Rosemont Stud at Gnarwarre, and trainer Danny O’Brien’s base near Barwon Heads both linked to recent successes on the first Tuesday of November.

But one of the most retold Melbourne Cup stories adds to the romance of a historic Geelong home on the market today.

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St Albans Stud was built for prominent trainer James Wilson in 1873 and has a direct link to 10 Melbourne Cup winners.

The original farm has been sliced up for suburban houses in St Albans Park, but the homestead and stables complex where trainer Harry Telford hid Phar Lap from gangs out to nobble him before taking out the 1930 Melbourne Cup is today owned by Geelong businessman Dean Montgomery.

Whitford Newtown agent Peter Fort, who is working to find a new owner for the 3.4ha property in Geelong’s east, said the links to the Cup add to the romance surrounding the home and helped draw potential buyers from far and wide to inspect the property.

“We’ve had quite a few inspections for a home of this calibre,” Mr Fort said.

“Most of the inquiries come from out of the area. We’ve had people from interstate travel down to see it, people from the Adelaide or Sydney, that have come down.”

Potential buyers of the 8-bedroom mansion will not only become it’s new owners, but custodians.

“It’s one of those properties where there’s a lot to take in,” he said.

“We’re now quoting $6m to $6.6m. We see it still shows value at that level just due to the land size alone. It is unique, and being unique requires a unique buyer, so it’s just time.”

Mr Fort said a couple of people have considered using the 30-room mansion for boutique accommodation, while others see the potential in reactivating a further subdivision.

Architects have also looked at how the historic stables could be converted to another use, he said.

While horses were previously agisted at St Albans, it’s lack of paddocks precludes most buyers in the market for a horse property.

But it’s not like there’s a dearth of good properties for people who own horses, with the region’s proximity to Melbourne, good rainfall and water access and sandy loam soils ideal for equine pursuits, said Charles Stewart Geelong rural agent Andrew Rice.

Mr Rice said mums and dads were the biggest buyers of horse-related properties in the region, whether it be for equestrian pursuits or not.

A 40ha lifestyle property at Murphys Run, Winchelsea and Mooraeloc Park, a 37.23ha holding complete with a 900m running track at Russell Rd, Bannockburn are among the properties on the market now.

Mr Rice said he previously sold the Winchelsea property the present owners as a bare paddock. It’s now an impressive contemporary home with five horse paddocks with stallion rail fencing, shelters, an Olympic size arena and extensive shedding and stables.

“That is a good farm. If you went to rebuild it now, you wouldn’t be getting much change out of the $2.925m to $3.2m they’re asking right now.

“Everything is virtually no more than five years old and it’s a good mix because it’s it does cater for your horse type of person but if you want to cut hay or run some cattle we can also do that.”

Mr Rice said the Russell Rd property is established for a horse owner with 15 paddocks, an arena, 900m track and Duncan equine fencing surrounding the five-bedroom family home complete with a pool and pavilion.

“It’s perfectly done. There’s not a cracker to be spent on that property and it’s also got the 900-metre track, so it’s very much in that horse category.”

RT Edgar Bellarine’s Felix Hakins revealed South Australian buyer had emerged to secure a 10ha lifestyle property at 522-550 Grubb Rd, Wallington, where the equine facilities were developed by a keen showjumper and dressage rider.

The property, which features a bespoke four-bedroom home from local builder Larkin & Drought, just sold in a confidential deal the Advertiser understands is below the initial $4.8m to $5.28m price expectations.

A full sized showjumping area, 22 paddocks and four 6m x 6m stables are among first-class equestrian facilities on the property.

The vendor designed the four-bedroom, four-bathroom house with help from a draftsman and wanted it to look like a shearing shed so it didn’t stand out in the area’s rural landscape.

“It’s a great result and truly a lovely set up there for the horse enthusiast and it has been purchased by a horse enthusiast from South Australia.”

Mr Hakins said while the owners were looking at using the residence as a holiday home, the property would be well used as an agistment facility.

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Astronomical vacancy rates have catapulted two Great Ocean Road holiday spots into Australia’s top 10 regions for unoccupied dwellings.

New analysis from Ray White reveals the Lorne-Anglesea district has the third highest unoccupied rate in the nation at 56 per cent.

The Otway region, which includes Apollo Bay, Forrest and Lavers Hill, ranked seventh with half of all dwellings sitting empty.

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While Ray White found the national unoccupied dwelling rate sits at 10.1 per cent, the figure was much higher in many regional areas.

Victoria claimed four of the top 10 spots, with premium holiday spots Point Nepean, which includes Sorrento and Portsea, and Phillip Island also making the list.

Great Ocean Road Real Estate put the vacancy figure even higher in the Lorne township, where just 31 per cent of dwellings were occupied on the last census night.

Aireys Inlet director James Worssam said more houses had been put up for sale amid steep land tax bills, but so far it hadn’t resulted in more permanent residents or a boost to long-term rental stock.

He said holiday home owners were instead looking to the short-stay accommodation market to recoup their costs.

“Everything has gone up, their rates have gone up because the values of their properties have gone up, the insurance on the house has gone up because there’s bushfires and floods everywhere,” Mr Worssam said.

“For a lot of people here it can cost them between $10,000 and $20,000 for the luxury of a holiday house and if you’re a self-funded retiree that’s a lot of money.

“Some people say it’s a good problem to have but the reality is it exists and a lot of people are converting their houses to holiday rentals to try and offset some of that.”

He said long-term private rentals remained scarce along the Surf Coast, with none currently available on his company’s rent roll between Anglesea and Lorne.

With a median house price of $1.57m, the Lorne-Anglesea area does not attract typically investors seeking strong returns.

Ray White head of research Vanessa Rader said while the region’s 3.8 per cent annual price growth was better than the regional Victorian average, it was far less than other markets around the country.

And, with a premium price tag, sellers were competing for a much smaller buyer pool.

“Established premium markets like Lorne-Anglesea show how tourism success doesn’t automatically translate to sustained appreciation,” Ms Rader said.

“These location may have reached value ceilings where growth depends on broader economic factors rather than tourism demand.”

She said Victoria’s land tax and skyrocketing insurance premiums in the wake of fire and floods were front of mind for holiday home buyers, particularly in coastal locations.

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