Hundreds of thousands of Australians now living beyond their means as mortgage stress explodes

Hundreds of thousands of Australians have fallen into mortgage stress amid the national cost-of-living crisis, spending more than they earn each month.

The latest OurTop10 Mortgage Stress Report found there were 421,725 households in mortgage stress across Australia’s 80 most affected postcodes.

The report found a net increase of 52,030 households experiencing mortgages stress from April to June, 2026 – with the federal budget handed down on May 12.  

Mortgage stress rose 14 per cent in just three months and 18 per cent over the past 12 months, with 68 of the 80 ranked postcodes recording worsening conditions.

Under the report’s methodology, mortgage stress refers to owner-occupier households in negative monthly cash flow.

This means their regular expenses – including mortgage repayments, utilities, insurance, transport and everyday living costs – exceeded their household income.

OurTop10 Director Mansour Soltani said financial pressure was no longer confined to Australia’s biggest housing markets.

“Mortgage stress is no longer confined to Australia’s outer suburban growth corridors,” he said.

“We’re seeing some of the fastest deterioration in Perth and, perhaps more surprisingly, severe financial pressure emerging in blue-chip suburbs across Melbourne and Sydney.”

The report found Perth recorded the nation’s largest quarterly increase in mortgage stress, adding 14,746 stressed households.

“Perth’s deterioration is particularly striking because the city has often been viewed as more affordable than Sydney and Melbourne,” Mr Soltani said.

“But the city’s relative affordability has not protected households from higher repayments and living costs.”

The worsening mortgage stress comes as Labor’s sweeping housing tax changes continue to dominate the political debate.

Treasurer Jim Chalmers’ 2026 federal budget scrapped negative gearing for existing residential properties and imposed a minimum 30 per cent capital gains tax.

The government argued the reforms were necessary to improve intergenerational equity, despite promising no changes to either tax prior to the election.

The latest Sky News Pulse / YouGov poll revealed a bleak view of Australia’s direction just over 12 months after the Albanese government won its historic second term.

Fifty-one per cent of Australians said Australia had become weaker and poorer compared with one year ago.

Only 15 per cent of people said the country was stronger and more prosperous while 34 per cent said there had been no change.

Despite the government’s emphatic electoral mandate, voters have increasingly expressed frustration over economic pressures and security concerns.

Younger people had a more positive outlook, with 28 per cent of Gen Z saying the country was stronger compared to 32 per cent saying it was weaker.

Inflation has risen above target, interest rates have been elevated and housing accessibility remains out of reach for many.

Australia faces a combination of weak growth, stubborn inflation, geopolitical instability and a housing shortage that has pushed up rents and home prices.

The economy has slowed sharply, with the International Monetary Fund recently downgrading its 2026 growth forecast from 2 per cent to 1.9 per cent.

That result placed Australia 18th among the 30 major economies modelled by the financial institution.