Industry body urges borrowers to contact lenders and brokers before missing repayments
One in five more Australian households are now at risk of mortgage default, according to new data, as years of elevated interest rates and rising living costs push borrowers past their financial limits.
The figures, published by comparison group OurTop10, show an 18% increase in national mortgage default risk — a trend the Finance Brokers Association of Australia (FBAA) says reflects a "tipping point" long in the making.
The trade body is urging affected borrowers to seek help immediately, before they miss a repayment.
FBAA chief executive Leo Gagic (pictured right) noted that the findings aligned with the organisation's own research stretching back four years.
"These findings are not unexpected, as our own published research dating back to 2021 found that thousands of borrowers were vulnerable to even modest interest rate increases after a prolonged period of low interest rates," he said.
For Gagic, the default risk surge reflects the combined weight of higher interest rates and escalating living costs, with many households having drawn down savings to the point where there is little left to absorb further shocks.
His advice for those already feeling the strain? Engage lenders early and be transparent about the situation.
"Be open and honest about your circumstances and contact your lender as early as possible. Don't wait until you have missed a payment," he said. "Explain your situation and ask to speak with the lender's hardship team."
Lenders have a range of relief options available, he noted, including rate reductions, repayment pauses, reduced repayment amounts, loan term extensions, and full loan restructures.
"Clearly outline what has changed, what you can realistically afford, and provide any supporting information requested," Gagic said. "This can help you and your lender agree on a sustainable arrangement that gets you back on track."
Where direct negotiations with a lender fail to produce a workable outcome, the FBAA chief urged borrowers to consult a mortgage broker, adding that brokers are legally required to act in the customer's best interest and can access a wider pool of lenders than most borrowers can reach independently.
"Brokers are here to help and have access to a wide variety of lenders, including many that only deal through the broker channel," Gagic said. "Lenders often can't provide a solution because they are limited to their products, but a broker can look for solutions that suit your individual circumstances."
His overarching message to borrowers under pressure was to resist the urge to delay. "Start the conversation early because there may be more options than you realise," he said.
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