More Australians Struggle to Pay Mortgage Despite Interest Rate Cut

Around 0.71 percent of CBA customers were over 90 days behind their mortgage payments, the highest level since March 2019.

A man walks past a bank advertising home loans in Melbourne, Australia, on Feb. 7, 2023. William West/AFP via Getty Images

An increasing number of Australian homeowners are having difficulty repaying their mortgages despite the recent interest rate cut in February.

New data (pdf) from the Commonwealth Bank of Australia, the country’s largest retail lender, indicated that there had been a notable increase in mortgage arrears among its customers.

Specifically, the percentage of CBA borrowers who were over 90 days behind their mortgage payments reached 0.71 percent in the March quarter of 2025.

This was up from 0.61 percent in the previous year and the highest level since March 2019.

The CBA also reported a significant increase in personal loan arrears, with 1.51 percent of customers falling more than 90 days behind on these repayments.

This was up from 1.34 percent in March 2024 and 1.09 percent in March 2023.

Meanwhile, data from the Australian Prudential Regulation Authority showed that 0.94 percent of Australian borrowers missed their scheduled payments for 90 days or more in December 2024, compared to 0.73 percent in December 2023 and 0.6 percent in December 2022.

Despite the increase, the Australian Banking Association said most borrowers were meeting their mortgage responsibility, with arrears staying below the pre-COVID-19 pandemic levels.

February Interest Rate Cut

The new arrear figures come after the Reserve Bank of Australia reduced the official cash rate from 4.35 percent to 4.1 percent in February.

This was the first rate cut in four years after the central bank implemented an aggressive monetary policy to curb high inflation during and after the COVID-19 pandemic.

The RBA said its decision was due to a notable decrease in inflation from its peak in 2022, which brought the headline inflation rate down to 3.2 percent in the December 2024 quarter.

While borrowers are hoping for more rate cuts, the central bank has remained cautious about future downward movements.

In March, RBA Governor Michele Bullock said the bank did not believe a series of rate cuts were required in the current economic situation.

The governor also noted that its focus was on the U.S. government’s tariff policy and its impact on economic activity and inflation in Australia.

The bank will deliver its next interest rate decision on May 20.

At present, cash markets and economic experts are predicting that the RBA will announce a second interest rate cut next week, effectively slashing the cash rate by another 0.25 percent to 3.85 percent.