The RBA's own data showed only a small share of Mortgage holders falling short on Cash Flow before November's increase, but the question now is how much further those cushions can stretch.

Fewer than two in every hundred. That was the share of owner-occupier borrowers with a cash flow shortfall recorded in the minutes of the Reserve Bank's September meeting. It is a small number, and one the RBA has leaned on as evidence that households can withstand tighter policy.

On 3 November 2026, the Monetary Policy Board tested that resilience again. It lifted the cash rate target by 25 basis points to 4.85%, effective 4 November, in a 6–3 vote. Six members backed the rise and three preferred to keep the rate at 4.60%. It was the fifth increase of 2026, bringing the cumulative rise for the year to 125 basis points.

The obvious follow-up: if the shortfall figure was under 2% before this move, what happens now?

What "shortfall" tells us, and what it does not

Broadly, a cash flow shortfall describes a borrower whose incoming funds are not keeping up with their commitments. A low share suggests most mortgage holders are meeting repayments from income without running down savings.

Deputy Governor Andrew Hauser gave a consistent reading on 21 October, telling a Citi conference in Sydney that about 2% of mortgages were in negative cash flow. He also said the median mortgagee holds over a year of buffers.

But a single headline share can conceal a lot. It does not show:

  • how close other borrowers are to the threshold;
  • whether shortfalls are concentrated in particular regions or income groups;
  • how quickly the number could change if Job losses rise.

Those are the gaps worth keeping in mind when reading reassuring aggregates.

Alongside the shortfall figure, the RBA points to savings that many borrowers can draw on. The September minutes noted that median savings buffers were just under one year of scheduled repayments for borrowers in the lowest income quintile and almost two years for those in the highest.

The same minutes reported that scheduled mortgage payments were about 10% of household disposable income, around their 2024 peak, and that very few borrowers would be in Negative equity even if housing prices fell 20%. Negative equity matters because borrowers who owe more than their home is worth have fewer Options if they need to sell.

The October Financial Stability Review summarised the overall position: "Most Australian households with mortgages remain well placed to manage more difficult conditions." It also said: "Australian banks are well positioned to continue lending, even in a downturn."

What one more rise does to the arithmetic

Each increase draws a little more from the same pool. For a rough sense of scale, here is a hypothetical illustration using invented lender rates, not RBA figures.

On a $600,000 principal-and-interest Loan over 30 years, a move from a hypothetical 6.00% to 6.25% raises monthly repayments from about $3,597.30 to about $3,694.30, or about $97.00 a month. That assumes the lender passes on the whole increase, which is not guaranteed.

For a household with a healthy buffer, an extra amount of that size may be manageable. For one already near the shortfall line, the same sum could be the difference between covering costs from income and dipping into savings. Buffers measured in months of repayments also shrink in duration as repayments rise, even if the dollar amount saved stays the same.

The bigger threat to buffers: jobs

Rate rises chip away at buffers gradually. A lost job can drain them quickly. That is why the labour market outlook matters so much to the resilience question.

The Board's statement said "the Unemployment rate is projected to rise by more than expected in the August forecasts." The November Statement on Monetary Policy forecasts unemployment at 4.7% by December 2026, 4.8% by June 2027 and 5.1% by December 2028, compared with 4.4% in June 2026. In August, the RBA had forecast 4.5% for December 2026. These are forecasts and could turn out differently.

The RBA is not pretending the cost is painless. Hauser said: "No lost job is one to celebrate." He also argued: "We need a period of below-trend growth to bring Inflation down, and we're seeing that happening."

At the same time, the statement noted that employment is still expected to keep growing, so a rising unemployment rate does not necessarily mean widespread job losses.

Why the Board judged it could go again

The Board's decision implies a judgement that household balance sheets can bear another increase, and that the risk from inflation outweighs the risk to borrowers. Its statement was blunt: "there is an increasing risk that higher inflation expectations will become embedded."

Inflation remains above the 2–3% target on both key measures. Monthly headline CPI was 4.3% over the year to September 2026. Trimmed-mean inflation, the RBA's preferred underlying measure, was 3.7% over the year to the September quarter. The November SMP forecasts headline and underlying inflation remaining above 3% through much of 2027, with the table showing headline at 2.7% and trimmed mean at 2.9% by December 2027.

Assistant Governor Sarah Hunter, in an interview aired on 25 October, addressed the human side directly: "We're not trying to put people out of their homes."

The statement does not set out the reasoning of the three members who voted to hold, and individual votes were not attributed.

The bottom line

Before November's rise, fewer than 2% of owner-occupier borrowers were in cash flow shortfall, and median buffers ranged from just under one year to almost two years of repayments depending on income. Those figures suggest most households entered this latest increase with room to absorb it, but they predate the move and do not capture how many borrowers sit just above the line. The bigger test may come from the labour market, where the RBA now forecasts a faster rise in unemployment. Borrowers wanting to understand their own buffers can consider speaking with a licensed adviser or their lender.