A Sydney mother of two says another interest rate rise could force her to sell the family home she has lived in for nearly 26 years. Vanessa Merryweather, speaking to 60 Minutes, said she earns just over $900 weekly while her mortgage repayments sit near $800. Covid hit her business, and later bowel cancer and her daughter's lymphoma drained her savings buffer. Reserve Bank chief economist Sarah Hunter acknowledged the strain but said higher rates remain necessary to control inflation.
Australians are cutting back on groceries, skipping medical appointments and turning to credit as housing costs spread through the wider economy. Experian's latest Housing Pressure Report found 43 per cent of those surveyed had reduced spending on dining out and takeaway food. Almost 18.7 per cent had delayed healthcare or dental treatment. Pubs, bars, cinemas and clothing retailers recorded falls in trading, with construction businesses also weakening. Mortgage stress rose 7.3 per cent in the first half of 2026, with regional borrowers hit hardest.
The number of households under mortgage stress, meaning they spend more than they earn, rose to 450,539 in the top-ranked postcodes during the third quarter of 2026. That is a net increase of 31,318 over the quarter and 79,072 over the past year. The Digital Finance Analytics principal, Martin North, said there is a high risk more households will default on their loans and that the situation has reached a tipping point.
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Around 2.3 million Australian households have missed or delayed at least one bill in the past year to cover rent or a mortgage, according to Finder research. Electricity and gas bills were the most common payments put off, with 8 per cent of people saying they had delayed one. Finder money expert Richard Whitten said other bills can easily slip when housing costs take a large share of the budget. Separate REA data shows the national median advertised rent reached $675 a week in September, up 5.5 per cent over the year.
Australian house prices are more than 5 per cent below their peak, with forecasts pointing to further falls. Four rate hikes this year have cut borrowing capacity by about 9 per cent for a median-income household, according to Cotality. New Zealand and Canada have both seen larger price falls since their pandemic peaks, and affordability has improved in New Zealand as interest rates have dropped. Economist Saul Eslake says Australia's downturn is only beginning, and that a 10 to 15 per cent fall over two years could improve affordability.
Frankston households struggling with mortgages, rent and everyday costs can get free, face-to-face financial help at Frankston Arts Centre on Tuesday 20 October. The Bring Your Bills day is run by South East Community Links. New data estimates 7,818 Frankston households are under mortgage stress, up 22.4 per cent over the past year. South East Community Links CEO Peter McNamara says many households are being pushed to put groceries on credit or delay bills. Services on the day include financial counsellors, banks, energy and water retailers, Centrelink and legal services.
