Interest Rates • Budgeting • Mortgage Strategy
RBA says most households can handle higher rates — but here’s the part borrowers should not ignore
In its March 2026 Financial Stability Review, the RBA said most borrowers are generally well placed to cope with higher repayments as rate hikes accumulate. That’s reassuring — but the RBA also flagged that cashflow pressure is expected to increase in the near term, and that pockets of stress still exist. Here’s what it means in real life, and what to do next.
What the RBA is saying (the headline message)
The RBA’s view is that the “starting point” for households is strong, with many borrowers still holding buffers that can help them absorb higher repayments and rising living costs. The Bank’s overall message: households and businesses are generally well placed to weather the pressure, and the sectors are unlikely to become a source of systemic instability.
Translation: the RBA isn’t seeing widespread mortgage trouble right now — but it’s watching the edges closely.
The important bit: the next year can still feel tougher
Even with stronger buffers, the RBA expects cashflow pressure to increase in the near term as recent hikes and higher living costs flow through. In other words: “system stability” can look fine, while individual households still feel the squeeze.
Borrower reality check
- Repayments: variable rates can rise quickly after hikes.
- Cost of living: higher day-to-day costs reduce room to move.
- Buffers matter: offset/redraw can be the difference between “fine” and “tight”.
Mortgage stress and arrears: what the RBA is seeing
The RBA noted that the share of mortgagors in severe financial stress has declined since mid-2024 and remains small, with arrears still low and supported by strength in the labour and housing markets.
That said, the RBA explicitly acknowledges that some borrowers remain under budget pressure — meaning there can be pockets of strain even when the overall numbers look healthy.
Regulators are watching “riskier” lending and investor activity
The RBA highlighted faster credit growth and said it’s important lending standards remain prudent so resilience isn’t undermined. It pointed to early signs of riskier lending ticking up in some segments alongside very strong investor housing credit growth.
- High DTI lending: investor high debt-to-income lending has increased (though still below new APRA limits).
- High LVR first home buyers: higher high-LVR activity linked to government support schemes.
- Monitoring: regulators will watch how these trends evolve as tightening continues.
Why this matters: when regulators tighten and lenders get cautious, borrowing power and approval speed can shift — sometimes quickly.
What you can do now (simple, practical moves)
If higher repayments are likely in the near term, the best play is to get proactive — before you’re forced into reactive decisions.
Quick checklist
- Check your buffer: how many months of repayments do you have in offset/redraw?
- Rate check: are you paying a “loyalty tax” vs current market pricing?
- Structure review: would a split (part fixed/part variable) reduce stress without killing flexibility?
- Plan ahead: if you’re buying soon, get pre-approval sorted early while servicing remains comfortable.
Want a quick check on your rate and buffer?
If you’d like, we can run a quick review of your current rate, repayments, and loan structure — and map the best options for your situation. No pressure, just clarity.
Note: This is general information only and doesn’t consider your personal objectives, financial situation, or needs.