Roy Morgan pegs July mortgage stress at 32.5%, an 18-year high. SQM's distressed listings up 10% year on year

This article is general information only. It does not consider your personal circumstances and is not tax, credit or investment advice. Speak to a registered tax agent, mortgage broker or property lawyer before acting on any of the figures below.

The Roy Morgan print#

Roy Morgan published its July 2026 mortgage stress reading on Monday 1 September 2026. The headline: 32.5% of Australian mortgage holders 'at risk' of mortgage stress in July 2026, up 2.2 percentage points on the June reading and equivalent to 1,786,000 people (Roy Morgan, July 2026 mortgage stress up 2.2% points to 18-year high of 32.5%, 1 September 2026).

That is the highest 'at risk' share since September 2008, when the Global Financial Crisis was folding across a bank system still holding an official cash rate of 6.00% after a mid-2008 peak of 7.25%. The all-time record on Roy Morgan's series is 35.6% from that same 2008 cohort. The July 2026 print does not match that record. It does match the direction of travel and, more importantly, it prints against a cash rate of 4.35%, well below the 2008 peak.

The stress reading is a modelled measure. It captures households whose forecast repayments would push more than a defined share of household after-tax income into servicing the mortgage, using the current cash rate and the household's own reported income. Roy Morgan runs the model each month against a rolling survey of Australians who hold a mortgage. It is not an arrears count. It is not a default forecast. It is a leading indicator of household balance sheet strain.

The 2.2 percentage point jump from June to July is the sharpest single-month move in the current cycle. It sits inside the shadow of three RBA cash rate increases through the first half of 2026 that took the cash rate from 3.60% at the start of the year to the current 4.35%, and it sits alongside the ABS June quarter national accounts print showing household mortgage interest costs up 10.4% for the quarter.

The extreme stress cohort#

The line beneath the headline matters more for a landlord. Roy Morgan's separate August analysis put 19.8% of mortgage holders in 'extreme' mortgage stress in June 2026, equivalent to roughly 1.06 million people, up from 16.7% in December 2025 and higher than the 19.3% reading from June 2024 (Roy Morgan, Extreme mortgage stress increases nationally, August 2026).

The concentration inside that 19.8% is the important read. Among mortgage holders on household incomes below $100,000, 48.7% sit in extreme mortgage stress. Among mortgage holders on more than $100,000, the figure is 11.3%. In the six months to June the extreme-stress share rose by 10.8 percentage points in the lowest income (E) quintile and by 8.7 percentage points in the second-lowest (FG) quintile.

That is a cohort read that maps directly onto the rental market. Extreme stress in the below-$100,000 bracket runs across suburbs where the local rental cohort is also on comparable household incomes. It affects a landlord in two directions at once: the borrower cohort inside the landlord's own investor loan book, and the tenant cohort in the properties the landlord holds.

The SQM distressed listings count#

The distress read from Roy Morgan sits alongside a much smaller distressed listings count. SQM Research's total listings report for August put the national distressed listings tally at 4,510 properties, up 4.2% for the month and 10% year on year (SQM Research, media release, August 2026 total listings).

The state picture is uneven and worth reading carefully:

• Queensland: 1,497 distressed listings, up 8.2% for the month and 25.3% year on year
• Western Australia: up 11.9% for the month and 39.6% year on year
• South Australia: up 11.6% for the month and 50.7% year on year
• ACT: up 15.7% for the month and 59.5% year on year
• New South Wales: down 0.8% for the month, remains below last year
• Victoria: down 3.7% for the month, remains below last year

That is a two-speed distressed listings map. The growth-cycle states of Queensland and Western Australia carry both the highest state final demand prints and the highest year-on-year distressed listings growth. South Australia and the ACT are lower-base states where the same distressed count moves the year-on-year percentage more sharply.

New South Wales and Victoria are the two states where the distressed pool has softened for the month, but the New South Wales starting point sits alongside the ongoing Rental Taskforce enforcement posture and Victoria's soft print sits alongside the 42.8% higher total listings than a year ago on SQM's July count. Soft distressed prints in NSW and VIC do not mean soft supply prints.

The lag between stress and forced sale#

The gap between 1.79 million stressed holders and 4,510 distressed listings is the number a landlord planning a 2026 sell decision needs to understand.

Two mechanics explain the gap.

One, mortgage stress is a leading indicator, not a coincident one. Household distress typically shows up first in modelled stress readings, then in bank hardship applications, then in savings buffer drawdowns, then in delinquency data, then in listing behaviour. The distressed listings data historically lags the modelled stress reading by 12 to 24 months. That is the observed pattern across the 2008 and 2011 cycles that Roy Morgan's series runs across.

Two, bank hardship pathways have absorbed the front-end pressure. The big four have run hardship variations hard through 2026: repayment pauses, extended interest-only periods, term extensions, and part-payment arrangements. That work has kept borrowers off the forced-sale list. It is why the APRA prudential data still shows 90-day arrears below 1.4% nationally despite Roy Morgan's line moving up. The hardship pathway does not eliminate the pressure. It defers it into the tail. A borrower on a two-year interest-only extension is on the same forced-sale glide path the modelled stress reading indicated, but the sale itself sits 12 to 24 months further out.

For a landlord holding stock in Queensland, Western Australia, South Australia or the ACT, that lag is the operational window. The state distressed count is already moving. Extending the stress reading forward at the current cash rate implies more supply into that pool through the back half of 2026 and the first half of 2027, and any 29 September hike accelerates the arithmetic.

The investor loan book context#

The demand side of the investor book has already turned. The ABS Lending Indicators for the June quarter, released on 14 August, show new investor loan commitments down 10.2% by value and 8.6% by number in the quarter. The number of new investor loans has now fallen for two consecutive quarters. Total new housing loans came in at $97.6 billion, a $5.4 billion or 5% fall on the March quarter and the sharpest quarterly fall since September 2022.

Owner-occupier lending fell more gently: down 1.9% by value and 3.3% by number for the quarter. First home buyer commitments fell 2.9% by number but the value rose 0.2%, reflecting bigger tickets on fewer loans as first home buyers borrowed at the upper end of their capacity.

That is the demand-side confirmation of the pressure the stress reading is showing on the servicing side. Fewer landlords are adding to the book, and the ones already on the book are running the servicing arithmetic against the current 4.35% cash rate and the 10.4% quarterly lift in household mortgage interest costs the ABS printed in the national accounts.

The 29 September RBA sit#

The Reserve Bank of Australia's board meets on Tuesday 29 September 2026 at 2:30pm. The market pricing sits between a 60% and 80% probability of a 25bp hike depending on the source, and the big-four economist split is wide:

• NAB: 25bp hike in September to 4.60%
• CBA: 25bp hike in November to 4.60%
• ANZ: 25bp hike in November to 4.60%
• Westpac: hold at 4.35% through 2026

(Aussie, RBA expert predictions, updated September 2026)

The July stress reading did not move that consensus. It reinforces the base case. A hike lifts servicing costs on the investor loan book by roughly $91 a month per $600,000 of interest-only exposure, and it pushes the next monthly Roy Morgan read materially higher against a base of 32.5%. A hold at 4.35% leaves the September stress print roughly flat, but the extended pause is exactly what has been pushing the extreme-stress cohort deeper into the below-$100,000 income segment.

The wider Cotality August chart pack tells the same story on the price side: the national Home Value Index fell 0.9% in August, the fifth straight monthly fall, and 93% of capital-city suburbs recorded a fall through winter (Cotality, Monthly Housing Chart Pack, August 2026). Auction clearance rates have been sub-50% for nine weeks running, per the 16 August final clearance data.

The four landlord moves this week#

The prints are lined up. The operational reads are:

One, stress test the loan schedule on a 4.60% cash rate scenario. Do not run it on the current 4.35% and assume you have a September buffer. Run the actual P&L on the September quarter against a 25bp hike scenario for October and December repayment cycles on the Propkt mortgage calculator. If the servicing arithmetic breaks at 4.60%, that is the number to act on now, not the number to hope for at 4.35%.

Two, price the state distressed pool into any 2026 sell decision. If you hold stock in Queensland, Western Australia, South Australia or the ACT, the SQM state distressed count is already up between 25% and 60% year on year. That pool grows the discount to comparable sales as it deepens. Selling into an early-stage distressed pool prints a smaller discount than selling into the same pool 12 months from now.

Three, refresh the landlord insurance rent default cover. The 48.7% extreme stress reading in the below-$100,000 income cohort is the tenant cohort as well as the borrower cohort. Rent default risk sits at the tenant-side of the same pressure the Roy Morgan model is picking up on the mortgage-holder side.

Four, book the refinance conversation this month. The retention team on any big-four investor loan has discretion right now, and the pricing gets worse the deeper the 29 September decision runs. If a fixed rate rolls before December, do the refinance work in September, not October.

The one number to hold#

32.5% in July, up 2.2 points on June. 1,786,000 people. The 18-year high on Roy Morgan's series is 35.6%.

That is the read. The distressed listings count is small today at 4,510 nationally, but the state map is already broadening and the historical lag between stress and forced sale is 12 to 24 months. The 29 September RBA decision decides whether the September stress print flattens or accelerates. Everything else on a landlord's desk this week starts from that reading and works backward.

Propkt's mortgage calculator, expense tracking and rent management tools sit next to that arithmetic so the numbers on your desk match the numbers in the release.