Feeling the Squeeze? What to Do If Your Home Loan Repayments Are Getting Tight

The Reserve Bank has lifted the cash rate again, the fourth increase this year. If your budget was already stretched, this latest move may have you wondering how much further it can go.

The good news is that you have more options than you might think, and the earlier you act, the more of them you’ll have.

If money feels tighter than it used to, you’re far from the only one. Roy Morgan puts 32.5% of mortgage holders at risk of mortgage stress in July 2026, an 18-year high and the sixth monthly rise in a row. That’s roughly 1.79 million people, and it’s the highest reading since the Global Financial Crisis.

Underlying inflation is also proving stubborn. According to the Australian Bureau of Statistics, headline inflation eased to 3.5% over the 12 months to July, but trimmed mean inflation, the measure the RBA watches most closely, held at 3.6%. Both sit above the RBA’s 2–3% target band, which means the pressure on rates may not ease as quickly as many borrowers had hoped.

To put rate moves in perspective, each 0.25 percentage point rise adds roughly $15 to $16 a month for every $100,000 owed on a 25-year loan. On a $600,000 loan, the three rises this year add up to around $280 a month more than in January. You can check what it means for your own loan with our Loan Repayment Calculator.

Mortgage stress rarely arrives all at once. It tends to creep in. Some signs to watch for include:

• Dipping into your offset or redraw to cover everyday bills, rather than for planned expenses.
• Relying on credit cards or buy now, pay later to get through to the next pay day.
• Skipping or delaying other bills, such as insurance, car registration, or utilities.
• Losing sleep or avoiding your bank statements, which is often the first sign that something needs to change.

If any of these sound familiar, now is the time to act, not after a missed repayment.

When your loan is up to date and your credit file is clean, you’re in the strongest position to negotiate, restructure or refinance. Once repayments start being missed, your options narrow quickly, as lenders become more cautious and arrears can affect your credit history for years.

There’s another reason not to wait. With property values easing in parts of NSW, some borrowers may find their equity isn’t what it was a year ago. Sydney values are now 7.1% below their February 2026 peak. If your loan-to-value ratio has crept up, refinancing can become harder or more expensive. Checking where you stand now helps avoid surprises later.

Every situation is different, but here are some of the options we regularly work through with clients:

1. Review your rate. Many lenders are still competing hard for new customers, as we covered in our recent article, It’s a Borrower’s Market. Even a modest reduction can make a real difference to your monthly budget.
2. Refinance to a better-suited loan. A new lender may offer a sharper rate or better features. However, lenders assess your ability to repay at a rate around three percentage points above the actual rate, so it pays to check your eligibility before applying.
3. Extend your loan term. Resetting or lengthening your loan term can lower your monthly repayments. You’ll pay more interest over the life of the loan, so it’s worth weighing up carefully.
4. Restructure your loan. Splitting your loan between fixed and variable, or temporarily switching part of it to interest-only, can give you breathing room and more certainty while you get back on track.
5. Consolidate high-interest debts. Rolling credit cards or personal loans into your home loan can reduce your total monthly outgoings. It needs discipline, though, so you don’t end up paying off a car or holiday over 25 years.

If you’re finding it hard to meet your repayments because of illness, job loss, reduced income or another change in circumstances, you can ask your lender for financial hardship assistance. This might include a temporary pause, reduced repayments, or an extended loan term.

A few things are worth knowing:

• You can apply at any time, including before you miss a repayment. You don’t need to be in arrears.
• Your lender must respond within set timeframes, generally 21 days, and must consider your request.
• If you’re unhappy with your lender’s response, you can lodge a free complaint with the Australian Financial Complaints Authority (AFCA).
• Free, confidential support is available from the National Debt Helpline on 1800 007 007.

We can help you prepare a hardship request, or talk to your lender on your behalf, so you’re not doing it alone.

At AAP Finance Brokers, we care about more than getting you a loan. We care about making sure it keeps working for you. When repayments start to feel tight, we can:

• Review your current loan against the wider market
• Work out whether refinancing, restructuring or a rate negotiation is your best option
• Check how changes in your property value affect your options
• Help you understand and access hardship support if you need it

The hardest part is often making the first call. If you’re feeling the pressure, or just want peace of mind before the next rate decision, get in touch for a free, no-obligation home loan health check.

📞 1300 141 453

We care, to ensure you get the best loan.