02 Apr 2025 Mortgage Stress: What It Means for Melbourne Homeowners and How to Avoid It
If it feels like your mortgage is chewing through your pay and the bills just keep piling up, chances are you’re feeling the effects of mortgage stress—and you’re not alone.
Mortgage stress happens when your monthly repayments take up too much of your household income, leaving little left for everyday expenses—and it’s becoming a serious issue for Melbourne homeowners. Left unchecked, it can lead to financial burden, missed payments, and long-term money trouble.
Our experienced mortgage brokers here at EverLend can help take the pressure off by reviewing your loan and finding smarter options for your repayments. Whether it’s refinancing, adjusting your loan term, or creating a more realistic budget, we’ll help you get back in control of your mortgage, without the stress.
This guide will take a closer look at what’s driving mortgage stress in 2025—and what you can do to avoid it.
What is Mortgage Stress?
Mortgage stress happens when a big chunk of your income goes towards your home loan, leaving you stretched thin when it comes to covering everyday expenses like food, bills, and transport. The most common definition of mortgage stress is when you’re spending more than 30% of your gross household income on monthly mortgage repayments.
This is often used as a rule of thumb to flag when a mortgage is becoming unmanageable. It doesn’t take into account your personal circumstances—like if you’ve got kids, a personal loan, or rising living expenses—so for many people, the stress can hit well before that 30% mark.
The key takeaway? If your home loan repayments are regularly stopping you from affording the basics or saving anything at all, that’s a strong sign you could be under mortgage stress.
Current Melbourne Mortgage Stress Trends in 2025
As of late 2024, Roy Morgan reported that over 1.57 million Australian households were estimated to be in mortgage stress—with Victoria leading the nation in raw numbers. In Melbourne specifically, nearly 30% of mortgage holders are now spending more than 30% of their household income on mortgage repayments, with many families experiencing higher levels of mortgage stress in suburbs like Cranbourne, Roxburgh Park, and Hoppers Crossing.
According to Digital Finance Analytics, this figure could rise to 33–35% in 2025, particularly as more fixed-rate loans expire and borrowers roll onto higher variable rates. With the RBA’s cash rate holding firm and cost of living pressures continuing, Melbourne’s outer suburbs are expected to remain the worst-affected areas in the coming year.
Need help dealing with mortgage stress?
A good broker can make all the difference. At EverLend, we’ll help you find better rates, manage your repayments, and take real pressure off your budget—without the stress or confusion.
How to Know If You’re in Mortgage Stress
It’s not always obvious at first—mortgage stress can creep in quietly and build over time. Even if you’re under that 30% income threshold, the real impact depends on your personal circumstances and what’s left over after your loan is paid each month.
Here are some clear and common warning signs you may be in mortgage stress:
- You regularly dip into savings or emergency funds to make loan repayments
- You’ve fallen behind on household bills, credit cards, or other debt obligations
- You’re using Buy Now Pay Later services or personal loans just to manage everyday expenses
- Your discretionary spending—like meals out or school activities—has been completely cut
- You worry often about unexpected expenses like car repairs or medical bills
- There’s no room in your household budget for savings or even minor extras
- You avoid checking your bank account or statements because of financial stress
- You’ve missed or delayed a mortgage payment, or are close to mortgage arrears
If you’re nodding along to any of these, it’s time to take action—and the earlier, the better.
How to Avoid Mortgage Stress
Mortgage stress isn’t always avoidable, but there are smart ways to reduce your risk before it takes hold. A few early steps can make a big difference in protecting your budget, your home, and your peace of mind.
Here are six proven ways to avoid falling into mortgage stress:
1. Borrow within your means, not your limit
Just because a lender approves you for a large amount doesn’t mean you should take it. Stick to a loan size that leaves plenty of room for living expenses, unexpected costs, and interest rate rises.
2. Choose the right loan structure
Whether it’s a variable home loan, fixed, or split, the right setup depends on your cash flows and future plans. A good mortgage broker can help tailor this to your personal circumstances.
3. Build a buffer into your repayments
Make extra repayments when you can, or set your monthly repayments slightly above the minimum. That way, you’ll be ahead if interest rates rise or your income drops.
4. Use offset or redraw accounts wisely
Put any excess funds or extra income into an offset account linked to your loan. It reduces interest and keeps your money accessible for emergencies or financial commitments.
5. Review your spending habits regularly
Track your household budget every few months. Cut back on discretionary spending, cancel unused subscriptions, and keep an eye on where your money goes.
6. Get expert advice before things get tough
Speak to a mortgage broker such as EverLend or a qualified financial counsellor early, especially if you’re feeling the squeeze.
Being proactive now can help you avoid the stress and strain that comes with falling behind later.
Worried your loan’s becoming unmanageable? Let’s talk before it gets harder.
At EverLend, our mortgage brokers will take a personal look at your situation, not just your numbers. Whether it’s adjusting your repayments, exploring better loan options, or simply giving you honest advice, we’re here to help you breathe a little easier. Call us today at 03 7036 3356 for a free consultation.
Frequently Asked Questions (FAQs)
What is the 30% mortgage stress rule?
The 30% mortgage stress rule suggests that if loan holders spend more than 30% of their household income on their mortgage rate, they’re considered at risk of mortgage stress. However, this rule doesn’t factor in financial circumstances like monthly expenses, additional costs, or the impact of rising property prices.
How many Australians are in mortgage stress?
As of late 2024, around 1.57 million Australian households, including a large number of Victorian households, were estimated to be under mortgage stress. With rising house prices, stagnant wages, and growing monthly expenses, this number is expected to climb in 2025.
What Australian suburbs are worst affected by mortgage stress?
Suburbs with fast-rising property prices and lower household income are being hit hardest, such as Cranbourne, Hoppers Crossing, and Roxburgh Park. These areas often face a higher risk of mortgage stress due to stretched budgets and growing financial burdens.
What classifies as mortgage stress?
You’re considered under mortgage stress when your mortgage payments are your biggest expense, and they limit your ability to manage living costs, emergencies, or everyday bills. It’s not just about numbers—it also depends on your personal and financial circumstances.
How to cope with mortgage stress?
Start by reviewing your financial decisions, tracking monthly expenses, and reducing non-essential spending. You can also explore debt consolidation, speak to financial counselling services, and look for ways to access extra funds or support programs.
How to pass a mortgage stress test?
To pass, you need to show that your finances could handle a rise in the mortgage rate (often 2–3% above current rates), while still covering all credit products, additional costs, and basic living needs. Lenders assess your income, loan term, and monthly expenses to determine if you’re at risk of mortgage stress.
How can mortgage brokers help with mortgage stress?
A mortgage broker can provide tailored financial advice, help restructure your loan, and find lenders offering more suitable products. They can also assist in lowering repayments, freeing up extra funds, and connecting you with financial counselling services if needed.
Final Thoughts
Mortgage stress is something more and more Victorian households are facing in 2025—and it doesn’t mean you’ve done anything wrong. With rising house prices, higher monthly expenses, and unexpected hits to your budget, it’s no surprise that many home loan holders are feeling the pressure. The good news? You don’t have to push through it alone.
At EverLend, our experienced mortgage brokers are here to help you make smarter financial decisions, find better loan options, and ease the pressure on your finances. Book a free consultation with us today—no strings attached, just honest support and real solutions that work for your situation. Visit everlend.com.au or call us on 03 7036 3356 to get started.