32.5% of Australian mortgage holders, about 1.79 million people, were at risk of mortgage stress in July 2026. That's the highest share since 2008 and the sixth consecutive monthly rise, according to Roy Morgan's latest figures.
Roy Morgan's measure doesn't tell us how much money borrowers have sitting in an offset account or available through redraw. But it raises a more useful question for homeowners: how much breathing room does your mortgage actually have left?
That matters because the buffer many borrowers built when interest rates were falling is now being tested by higher repayments, rising household costs and the prospect of further rate rises.
Where did the mortgage buffer come from?
When the RBA cut the cash rate from 4.35% to 3.60% during 2025, variable mortgage rates fell with it. For borrowers who kept making the same repayments rather than reducing them, more of each payment went towards paying down the loan.
That created extra breathing room, but it doesn't look the same for everyone.
- Redraw: If you kept your repayments higher after a rate cut, the additional amount paid into the mortgage increased the amount of principal you had paid off. If your loan allows redraw, some of that money may be available to access again.
- Offset: An offset balance only increases when you put money into the account and leave it there. A lower interest rate or unchanged mortgage repayment does not, by itself, create an offset balance.
So while both can provide a financial cushion, they work differently.
An offset gives you accessible cash while reducing the interest charged on your linked mortgage. Redraw gives you access to additional repayments you've already made, subject to your lender's rules.
Why does that buffer matter now?
A mortgage buffer isn't permanent. When rates rise, higher repayments start eating into household cash flow. If a household has money in an offset or accessible redraw, it can absorb some of that increase, at least for a while.
Research from the e61 Institute found that mortgage holders absorbed around 70% of the increase in repayments during the last rate-hiking cycle by drawing down their savings and mortgage buffers rather than cutting spending.
That raises a possibility: are some of those buffers now starting to run down?
Roy Morgan's latest figures show mortgage stress has risen for six consecutive months, with 32.5% of mortgage holders now classified as being at risk. The rise could reflect a combination of higher mortgage repayments, pressure on household budgets and weaker income or employment conditions. But the gradual drawdown of the buffers that helped households absorb earlier rate rises could also be part of the picture.
That's particularly relevant now. The RBA's next cash rate decision is on 29 September, and economists are divided over whether the next increase comes in September or later in the year.
If rates rise again, households with less breathing room will have less of a buffer to absorb the increase.
How much breathing room do you have?
Your mortgage buffer isn't necessarily sitting in one particular place. You might have money in an offset account, funds available through redraw, savings outside your mortgage, or no dedicated buffer at all.
Start by working out how much money you could realistically access if your mortgage repayment increased or your household came under pressure.
For example, if you have $15,000 in an offset and your monthly mortgage repayment is $4,000, that gives you enough to cover around 3.75 months of current repayments.
If you don't have an offset but have $10,000 available through redraw, you could use that figure instead, provided your loan allows you to access the funds when you need them.
You don't need to treat a particular number of months as a target. Your circumstances are different from another borrower's.
The more useful question is how much breathing room you have today and how quickly that could disappear if your repayments rise or you need to draw on your savings.
For example, if your $4,000 monthly repayment increased to $4,500, $15,000 would cover around 3.3 months rather than 3.75 months. If your offset balance is also falling each month as you use it for household expenses, your buffer is shrinking from both directions.
That trend is worth watching, because a buffer that is gradually being used up gives you less room to absorb the next financial shock.
What should you do if your mortgage buffer is shrinking?
A shrinking buffer is a reason to look at your finances early, before higher repayments or another unexpected expense leave you with little room to move.
Find out what's eating into your buffer
If your offset balance is falling or you're increasingly relying on savings or redraw, work out what's driving the change.
It could be higher mortgage repayments, rising household expenses, a change in income, or a combination of these.
Knowing the cause matters because the solution will be different.
Stress-test your repayments
Don't wait for another RBA decision to find out whether you could handle a higher repayment.
Calculate what your mortgage repayment would look like after another rate increase and see what that would do to your monthly budget and available buffer.
The aim isn't to predict where rates will go. It's to understand how much room you have if they rise again.
If the mortgage is the problem, look at your options
If higher interest costs are taking a bigger bite out of your cash flow, check whether you're still getting a competitive deal from your lender.
You could ask your existing lender for a lower rate. If it can't offer one, compare the potential savings from refinancing with the costs involved.
A lower rate won't solve every cause of mortgage stress, but it can reduce the amount of money your loan takes from your household budget each month.
And that's the point of watching your mortgage buffer. It's not about hitting a particular savings target. It's about knowing how much room you have, and spotting when that room is getting smaller.
By the time a shrinking buffer turns into missed repayments, your options may be more limited. Checking your mortgage while you still have breathing room gives you a chance to do something about the loan before it becomes a bigger problem.
Check your home loan before your buffer runs out.
