Australians are watching the numbers closely in 2025 as delinquency rates climb to levels not seen in nearly a decade. With the Reserve Bank holding interest rates higher for longer, and cost-of-living pressures squeezing household budgets, missed payments on mortgages and other loans are on the rise. But what exactly is the delinquency rate, why does it matter, and what do the latest figures tell us about the state of Australian finance?
What Is the Delinquency Rate and Why Should You Care?
The delinquency rate measures the percentage of loans (such as mortgages, personal loans, or credit cards) where borrowers are behind on payments—typically by 30 days or more. It’s a critical indicator for:
- Households—High delinquency rates can signal financial distress and increase the risk of repossession or default.
- Lenders—Banks and credit unions watch these rates to manage risk, set lending criteria, and adjust provisions for bad debts.
- Economists & policymakers—Rising delinquencies can be an early warning sign of broader economic trouble or shifts in consumer confidence.
In short, the delinquency rate is more than a dry statistic—it’s a pulse check on the financial health of the nation.
2025: The Year Delinquency Rates Returned to the Spotlight
After years of record-low arrears during the pandemic (thanks to government stimulus and ultra-low interest rates), 2025 is shaping up very differently. According to the Australian Prudential Regulation Authority (APRA) and major credit bureaus, mortgage delinquency rates have risen steadily throughout 2024 and into early 2025, now sitting at around 1.4%—up from a low of 0.9% in 2022. While still below the levels seen during the GFC, this uptick is catching the attention of lenders and regulators alike.
Key drivers behind the increase:
- Interest rate hikes: The RBA’s cash rate, which peaked at 4.35% in late 2024, has made variable-rate mortgage repayments hundreds of dollars more expensive per month for many households.
- Cost-of-living crunch: Higher prices for groceries, fuel, and utilities mean more Australians are struggling to meet all their financial commitments.
- Fixed-rate mortgage roll-offs: Many borrowers who locked in ultra-low rates during 2021–22 are now facing a ‘fixed-rate cliff’ as their repayments jump sharply when reverting to variable rates.
Credit card and personal loan delinquencies have also ticked higher, though not as sharply as mortgages. This reflects both tighter lending standards and a shift in consumer behaviour, with more Australians using buy-now-pay-later services (which are not always captured in traditional delinquency metrics).
Who Is Most at Risk—and What Are Lenders Doing?
The pain of rising delinquency rates isn’t evenly spread. The latest data shows that:
- First-home buyers—particularly those who bought at the peak of the market—are more likely to be in arrears, especially in outer suburban and regional areas where prices have softened.
- Households with high debt-to-income ratios are under the most pressure, especially if they have also experienced job loss or reduced hours.
- Investors with negatively geared properties may be more vulnerable if rental yields haven’t kept pace with rising mortgage costs.
Lenders are responding with a mix of caution and support:
- Some banks have tightened lending criteria, especially for higher-risk borrowers.
- There’s renewed emphasis on proactive hardship assistance, with lenders encouraged by ASIC and APRA to offer flexible solutions to borrowers in trouble—such as payment pauses, interest-only periods, or loan restructures.
- Lenders are closely monitoring arrears by postcode, loan type, and borrower segment to identify emerging hotspots before they become systemic risks.
What Does This Mean for the Broader Economy?
While delinquency rates are rising, they remain manageable by historical standards. The RBA and Treasury have both noted that most households are still ahead on their mortgage repayments, with large buffers built up during the pandemic. However, the risk is that if delinquencies continue to climb—especially if unemployment rises or property prices fall—this could trigger a feedback loop of tighter credit, lower consumer spending, and slower economic growth.
For consumers: Now is the time to review household budgets, check for better loan deals, and seek help early if you’re struggling. For investors and property owners, rising arrears are a reminder to factor in higher holding costs and potential rental vacancies when assessing your portfolio.
For policymakers: The next 12 months will be a test of the system’s resilience. Further targeted support for vulnerable households may be needed if arrears climb further, especially in regions hit hardest by job losses or housing market corrections.
