Governor Michele Bullock says scheduled mortgage payments are back to around 10 per cent of household disposable income – a figure that helps explain how the RBA thinks about the pressure its rate rises create.

Ten per cent. Put another way, roughly $100 of every $1,000 Australian households have to spend after tax is being directed to scheduled mortgage payments. That was the picture Reserve Bank of Australia Governor Michele Bullock painted at her media conference on 29 September 2026, when she said scheduled mortgage payments are "back up sort of around 10 per cent" of household disposable income.

The comment came on the same day the Monetary Policy Board lifted the cash rate target by 25 basis points to 4.60%, effective 30 September. The Governor did not shy away from the effect on borrowers: "I know this decision is difficult for households with a mortgage and businesses."

The 10 per cent figure is a useful lens on that difficulty. It shows how much of the economy's household income is already committed to servicing home loans before the latest increase flows through – and why the RBA keeps a close watch on it.

Unpacking the 10 per cent figure

A few terms are worth understanding before drawing conclusions from the number.

  • Scheduled payments are the minimum repayments borrowers are required to make under their loan contracts. They are different from total payments, which can also include voluntary extra repayments or money placed in offset and redraw accounts.
  • Disposable income is, broadly, the income households have available to spend or save after tax.
  • The ratio is an aggregate. It is a single economy-wide figure that blends together households with very different loan sizes, incomes and stages of repayment.

That last point is important. An economy-wide average of around 10 per cent does not mean every mortgage holder is spending 10 per cent of their income on repayments. A household that bought recently with a large loan may be committing a much bigger share, while one that has nearly paid off its home may be committing very little. Aggregate figures tell the RBA about the overall pressure on spending; they do not describe any individual household's situation.

The Governor's phrase "back up" also matters. It indicates the share has risen again to around this level, rather than describing a fixed or permanent state of affairs.

Why the RBA tracks the repayment burden

Monetary policy works partly through household cash flow. When the cash rate rises and lenders pass on higher rates to variable-rate borrowers, more of each pay packet goes on interest, and less is left for other spending. Across millions of households, that reduction in discretionary spending cools demand in the economy, which in turn helps ease pressure on prices.

This is sometimes called the cash-flow channel. The mortgage payment ratio is one way to gauge how strongly that channel is operating. A higher ratio suggests rate rises are biting harder into household budgets.

It is not, however, the only way higher rates affect the economy. Governor Bullock noted that "according to our research, in fact, the most important channel is the exchange rate channel". Higher rates can also encourage saving over spending and weigh on asset prices. The repayment burden is one gauge among several, not the whole story.

The Board's reason for accepting that pressure is clear from its statement: "inflation remains elevated", and high inflation must not become "embedded". Headline inflation was 4.0% over the year to August on the monthly CPI indicator, and the Governor said underlying inflation has "been about 3.5 per cent for the past six months" – both above the 2–3% target.

An illustration of what 25 basis points adds

To give a sense of scale, consider a simple illustration. It is not RBA data and does not reflect any lender's pricing or any real household.

On a hypothetical $600,000 variable-rate loan, a 0.25 percentage point rise in the interest rate adds $1,500 a year in interest, or roughly $125 a month before amortisation effects. Whether that represents a small or large change in the share of income going to repayments depends entirely on the household's income, loan structure and remaining term.

At the aggregate level, the direction is straightforward: if lenders pass on the increase, the share of income absorbed by scheduled repayments tends to edge higher, all else being equal. Rising incomes, borrowers switching loans or paying down debt, and new lending patterns can all influence how the ratio moves over time.

The other side of the household ledger

Mortgage repayments are only part of the squeeze on household budgets. The Governor acknowledged the wider cost-of-living pressure directly: "Every household has seen how the price of everything has gone up in recent years." She added: "Pay packets don't go as far as they used to".

The labour market matters too, because a household's ability to meet repayments depends heavily on keeping an income. Here, the Governor pointed to relative resilience. She said "the unemployment rate has risen from 3.5 per cent over the past couple of years to 4.6 per cent", while describing it as "still quite low historically" and noting "over a million jobs created". She also said: "yes, there is some evidence that there are more multiple job holders than there used to be".

The Board's statement said labour market conditions have "eased broadly as expected in recent months", with leading indicators "broadly stable".

Questions households may want to consider when thinking about their own position include:

  • What share of my after-tax income currently goes on scheduled repayments?
  • How would that share change if my lender lifted its variable rate, or if rates rose again?
  • How secure is my household's income, and how much of a buffer do we hold?

The Board has signalled further increases remain possible. It "will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed."

The bottom line

The Governor's "around 10 per cent" figure is a snapshot of how much of the economy's household income is already tied up in mortgage repayments. It helps explain both why rate rises slow spending and why the Board acknowledged the difficulty its decision creates. But it is an average, and individual circumstances vary widely. With the next CPI release due on 28 October and the next Board decision on 3 November, the repayment burden is likely to remain a key part of the conversation about how far and how fast policy needs to go.