Highlights

  • Hauser said around 2% of mortgage holders were in negative cash flow, compared with around 15% of renters.
  • He said the median mortgage holder had more than one year of cash buffers available for mortgage-related needs.
  • The Deputy Governor identified the exchange rate as a particularly important monetary-policy transmission channel.

Differences between mortgage holders and renters were a central part of Reserve Bank of Australia Deputy Governor Andrew Hauser's discussion of household finances on 21 October 2026. Speaking in Sydney, Hauser acknowledged that higher interest rates had increased pressure on borrowers, while stressing that the economic cost of inflation also affected people without mortgages. His comments drew on the RBA's analysis of household cash flow and the transmission of monetary policy.

He cited increased hardship and more calls to the National Debt Helpline among the signs of strain. He also noted weak consumer confidence and subdued consumption among some lower-income borrowers.

Mortgage Buffers and Negative Cash Flow

According to the Deputy Governor, about 2% of mortgages were in negative cash flow at the time of his remarks. He said this share was below its 2024 peak and linked part of the difference to households rebuilding savings buffers during the COVID period.

Hauser stated that the median mortgage holder had more than a year's worth of cash held in accounts that could be used to meet obligations. He did not suggest that every borrower had such reserves, and he acknowledged that financial hardship could be serious for affected households.

Renters and the Cost of Inflation

The comparison with renters was particularly pronounced. Hauser said that about 15% of renters were in negative cash flow, referring to HILDA information presented in the RBA's Financial Stability Report. He argued that high inflation imposed substantial hardship on lower-income renters who did not benefit from mortgage-related savings buffers.

His remarks described a distributional issue: higher interest rates can increase debt-servicing costs for borrowers, while inflation can erode the purchasing power of households that have little financial flexibility. These groups face different financial exposures, and the figures he quoted do not describe identical household circumstances.

Four Ways Monetary Policy Operates

Hauser identified four channels through which interest-rate changes affect the economy. These were the exchange rate; wealth and asset values; substitution between spending and saving across time; and direct household cash flow.

He said some RBA models suggested that as much as two-thirds of the effect of interest rates operated through the exchange-rate channel. That channel affects the price of imported goods and other international transactions, not simply overseas travel. He considered the cash-flow channel highly visible to households but not necessarily the largest channel in the Bank's models.

Balancing Inflation and Household Strain

The Deputy Governor recognised that a higher interest-rate setting can create immediate challenges, particularly for people with variable-rate mortgages. He also said the RBA's medium-term objective was to lower inflation and prevent continuing price increases from affecting household purchasing power.

The speech did not provide household-specific financial guidance or a forecast of mortgage repayments. It described the differing effects of monetary policy and inflation across households, which the Bank was considering alongside developments in the labour market and broader economic activity.

Key Insights

Hauser's discussion distinguished the direct cash-flow effect of higher interest rates from other channels, especially the exchange rate. He also drew attention to the uneven financial position of borrowers and renters. The percentages cited were descriptive indicators discussed in the speech, not predictions about individual households.