Scheduled mortgage payments have climbed back to around 10% of household disposable income, according to the September minutes, but the same documents show most borrowers still carrying sizeable buffers.

Ten per cent. That is roughly the share of household disposable income now going to scheduled mortgage repayments, according to the minutes of the Monetary Policy Board's 28–29 September meeting. The minutes say this is around the 2024 peak, the last time Australian households felt the full weight of a rate-tightening cycle.

The figure helps explain why Governor Michele Bullock prefaced her defence of September's 25 basis point rise with an acknowledgement: "Now, I know this decision is difficult for households with a mortgage and businesses with loans". It also sits alongside a set of reassuring numbers on borrower resilience. Both sides matter for understanding where households stand.

What the 10% figure measures

Scheduled mortgage payments are the minimum repayments borrowers are contractually required to make, including both interest and principal. Expressing them as a share of household disposable income, which is income after tax, gives a broad sense of how much of the national household budget is committed to servicing home loans before anything else is paid.

The minutes record that scheduled mortgage payments rose to around 10% of household disposable income, around their 2024 peak. Governor Bullock cited a similar figure at her media conference on 29 September, while noting she might not have the figure exactly right.

Several points are worth keeping in mind when reading it:

  • It is an aggregate. Some households will spend far more than 10% of their income on repayments, and many, including renters and those who own outright, spend nothing on a mortgage at all.
  • It covers scheduled payments only. Extra repayments that some borrowers choose to make are not included.
  • It was a figure discussed at the September meeting, so it predates the latest increase to 4.60%, which took effect on 30 September. The Governor said that rise was the fourth of 2026.

Why repayments rose again

The underlying driver is inflation. Headline CPI rose 4.0% over the year to August 2026 on the monthly measure, while the trimmed mean, the RBA's preferred underlying gauge, was 3.6% over the year to the June quarter. Both are above the 2–3% target.

"Higher interest rates are needed to ensure inflation returns to target," Bullock said. She argued that the cost of not acting would also fall on households: "high inflation hurts all Australians, especially the most vulnerable."

The Board's case drew on stronger-than-expected July inflation, especially in market services, fuel prices well above forecast, and price rises that were spreading across a large share of items. The minutes also record unit labour cost growth above what is consistent with the target, driven mainly by weak productivity.

The buffers behind the headline

The same minutes contain numbers that temper the squeeze story. Among them:

  • Cash-flow shortfalls are rare. Less than 2% of owner-occupier borrowers faced a cash-flow shortfall, broadly, a situation in which income falls short of what is needed for mortgage payments and essential living costs.
  • Savings buffers are substantial. The median savings buffer was just under one year of scheduled repayments for borrowers in the lowest income quintile, and almost two years for those in the highest.
  • Negative equity is limited. Very few borrowers are in negative equity, and the minutes say that would likely remain the case even if housing prices fell 20%.

The RBA's October 2026 Financial Stability Review, released on 1 October, paints a consistent picture. It says the share of variable-rate owner-occupier borrowers in cash-flow shortfall "increased a little over the first half of 2026, but remains relatively low at around 2 per cent", and projects that share at "a little under 2 per cent for some time". The review adds that most borrowers in shortfall have savings to cover it for at least six months, and describes "the median borrower able to cover over a year of scheduled mortgage payments at current interest rates", counting offset and redraw balances.

Bullock pointed to those balances herself: "remember that a lot of people have a mortgage, and then they have an offset account, which sits in the background."

Housing arrears of 90 days or more, according to the review, have "increased a little over the year to date but remains around pre-pandemic levels".

Where the pressure shows up

Aggregate resilience does not mean every household is comfortable. The minutes record that housing prices fell more than expected and that staff judge the cumulative fall is likely to be greater than assumed in August. New housing loan commitments fell sharply, led by investors. The Board's decision statement notes that consumer spending is easing gradually.

The lowest-income borrowers have the thinnest cushions: just under a year of repayments at the median, compared with almost two years for the highest-income group. Medians also hide the tails. Some households in every income group will have little or no buffer.

The Board weighed these risks. Among the arguments for holding rates in September, the minutes list downside risks to activity and employment, a possibly larger-than-expected effect from falling housing prices and the lagged effects of earlier tightening. Bullock has said rate changes take about 12 to 18 months to have their full effect.

Borrowers wondering what the figures mean for them may wish to understand a few things about their own loans: how their repayments have changed through 2026, how many months of payments any offset or redraw balance would cover, and whether their lender offers hardship assistance. Licensed professional advice can help with decisions specific to an individual situation.

The bottom line

The Board's own numbers confirm that the mortgage squeeze is real: scheduled repayments are absorbing around 10% of household disposable income, close to the 2024 peak. They also show that, in aggregate, borrowers have entered this phase with meaningful savings buffers, very low rates of negative equity and arrears around pre-pandemic levels. The Board has said it will raise rates "further if required", and the next cash rate update is due at 2.30 pm on 3 November 2026.