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<\/p>\nAny Reserve Bank lift to interest rates could be the added financial pressure that causes more households to collapse, consumer advocates say.<\/p>\n
“A rate rise would be the straw that breaks the camel’s back for a lot of our clients,” Mortgage Stress Victoria chief executive Nadia Harrison said.<\/p>\n
“There’s many people in a precarious financial position if those rates go up.”<\/p>\n
<\/p>\n
Nadia Harrison says for people struggling financially, a single change can bring everything tumbling down. (ABC News: Darryl Torpy)<\/p>\n
ABS data shows about one-in-three Australians have home loans and the vast majority of them are on variable rates.<\/p>\n
With another rate rise tipped to happen on Tuesday when the Reserve Bank board meets<\/a>, financial counsellors are bracing for a rise in calls to debt helplines.<\/p>\n Economists say data showing inflation is back up to 3.8 per cent<\/a> \u2014 well above the central bank’s target \u2014 makes it very likely interest rates will rise.<\/p>\n Roy Morgan data shows that a rate hike in February could cause “huge financial losses”<\/a> for many Australians and a 0.25 per cent rise could spell mortgage stress for 1.3 million households.<\/p>\n More employed people calling debt helpline\u00a0<\/p>\n Financial Counselling Australia CEO Domenique Meyrick said it was not just those on low incomes doing it tough.<\/p>\n What the inflation jump means for rates<\/a><\/p>\n The Reserve Bank cut interest rates three times last year, betting inflation would moderate. But that hasn’t happened, and now a rate hike looks likely next month.<\/p>\n She said calls to the National Debt Helpline from employed, middle-income Australians had been on the rise, and its team of financial counsellors were seeing a return to pre-pandemic levels of requests for support.<\/p>\n In the past six months of 2025, 83,545 people called the National Debt Helpline and 30 per cent of them were in full-time employment.<\/p>\n “We had a further cohort [of 14 per cent] who were in part-time paid work,” Dr Meyrick said.<\/p>\n “That’s 44 per cent of people who are calling in, who are employed and on an income, and still struggling to make ends meet.”<\/p>\n She said data also showed that of the 83,545 people who called the National Debt Helpline, 11 per cent of those callers were in mortgage stress.<\/p>\n Domenique Meyrick says more Australians are seeking financial counselling as the cost of everyday items grows. (ABC News: Simon Winter)<\/p>\n A significant portion of callers had dependent children, so it was “whole families” that were affected, Dr Meyrick said.<\/p>\n “We know that this period coming up \u2026 February, going back to school \u2026 is going be a massive sting,” she said.<\/p>\n “We often hear people who are highly distressed, who have no idea what to do next.<\/p>\n “Often by the time people reach out to financial counsellors, they’re experiencing high levels of financial stress, but the levels of mental health impact and psychological stress are incredibly high.” From June to December last year, 30 per cent of people who called the National Debt helpline were employed full-time. (Unsplash:<\/a> Nathan Dumlao<\/a>)<\/p>\n ‘Skipping medical appointments and meals’<\/p>\n Dr Meyrick said the National Debt Helpline’s financial counsellors frequently heard stories of people who were doing things like skipping medical appointments, skipping meals or reducing what they ate.<\/p>\n Financial counsellors regularly hear of clients skipping meals and going without to make ends meet. (Pexels:<\/a> Michael Burrows<\/a>)<\/p>\n “[These are] people who can’t sleep at night or people who are spending all of their time worrying about how they’re going to cover their next bill,” she said.<\/p>\n Dr Meyrick said the Reserve Bank’s job was to keep inflation under control, and that was “really important for the whole community”.<\/p>\n But for mortgage holders already experiencing financial stress, another rate hike would be a “bitter pill”, she said.<\/p>\n If rates go up, Dr Meyrick expects calls to the debt helpline to skyrocket.<\/p>\n Inflation hotter than forecast at end of 2025<\/a><\/p>\n Inflation rose at the end of 2025, picking up more than forecast, adding to rate hike expectations.<\/p>\n Already, 20 per cent of people calling the helpline are facing housing stress, which includes struggling to pay mortgage, rent, rates and strata.<\/p>\n Dr Meyrick said in early January, there was a noticeable spike in demand for assistance from Victoria, New South Wales, Western Australia, Queensland and South Australia.<\/p>\n She said there were several reasons middle Australia was feeling the pain, but one of the driving factors was the rise in the cost of housing, and therefore, how much people were borrowing to break into the market.<\/p>\n “You’ve got this group of people who are kind of getting a double whammy \u2026 they’re experiencing stress because of increasing cost-of-living pressures, but they’re also mortgage holders,” Dr Meyrick said.<\/p>\n “What that means is that with interest rate hikes, they’re kind of getting it from both sides.\u00a0<\/p>\n “There’s definitely a pain point there.”<\/p>\n How did we get here?<\/p>\n This situation has been brewing since the COVID pandemic, when the Reserve Bank cut interest rates to emergency levels to keep money flowing in 2020.<\/p>\n The Reserve Bank lifts interest rates to try to lower high inflation, which is the rate of annual price rises that indicates an over-heated economy.<\/p>\n Chalmers says inflation not his fault<\/a><\/p>\n Less than a year after the Reserve Bank started cutting rates, the prospect of a rate rise is a political nightmare for a treasurer hoping for clear air.<\/p>\n When Philip Lowe was governor of the Reserve Bank, he promised rates would likely stay low until 2024, and later apologised to Australians for giving them unclear guidance that led to hundreds of thousands taking out big mortgages.<\/a><\/p>\n But inflation began to roar in 2021 and rates were lifted higher in 2022 and 2023.<\/p>\n Inflation was seemingly under control in 2024 and fell back into the bank’s so-called “target range” of 2\u20133 per cent.<\/p>\n Interest rates were cut three times last year under the expectation that inflation would further moderate.<\/p>\n But it appears that has not happened, and now most economists are predicting a rate hike on Tuesday and possibly another in May.<\/p>\n Australians unable to service their loans should contact their lenders early, advocates say. (Unsplash:<\/a> Vitaly Gariev<\/a>\/file photo)<\/p>\n Borrowers in strife urged to contact lenders<\/p>\n People in strife have been encouraged to talk to their lenders as early as possible, as banks have an obligation to offer assistance to people in financial hardship.<\/p>\n “There’s a correlation between people with mental health challenges and getting to late-stage [debt collection] proceedings,” Mortgage Stress Victoria’s Ms Harrison noted.<\/p>\n “They don’t open their mail because it’s stressful, it’s alarming.<\/p>\n “But there’s a category of people with their head in the sand,” she added, referring to the mental stress that comes with financial troubles.<\/p>\n","protected":false},"excerpt":{"rendered":"Any Reserve Bank lift to interest rates could be the added financial pressure that causes more households to…\n","protected":false},"author":2,"featured_media":398256,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,9920,3363,14268,1294,17327,1431,814,122532,149231,8376,36022,35665,56,54,55],"class_list":["post-398255","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-cash-rate","tag-cost-of-living","tag-cpi","tag-economy","tag-financial-stress","tag-inflation","tag-interest-rates","tag-mortgage-stress","tag-national-debt-helpline","tag-personal-debt","tag-rate-hike","tag-reserve-bank","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/398255","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=398255"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/398255\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/398256"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=398255"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=398255"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=398255"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"A](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/01\/aec584cb2cd87b204640362a7a637cd0.jpeg\")
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