The Finance Brokers Association of Australia (FBAA) says new data by comparison group OurTop10 that shows an 18 per cent increase in national mortgage default risk is deeply concerning, but highlights growing financial pressure facing Australian households.

FBAA CEO Leo Gagic has urged borrowers under pressure to seek help before they miss a repayment.

“These findings are not unexpected, as our own published research dating back to 2021 found that thousands of borrowers were vulnerable to even modest interest rate increases after a prolonged period of low interest rates,” he said.

Mr Gagic said the rising risk of mortgage default reflects the combined impact of higher interest rates over recent years and escalating living costs, with many households reaching a financial ‘tipping point’ after years of drawing down savings.

To those currently impacted, he advised to “be open and honest about your circumstances and contact your lender as early as possible. Don’t wait until you have missed a payment.”

“Explain your situation and ask to speak with the lender’s hardship team.”

Mr Gagic noted that lenders may be willing to negotiate a more competitive interest rate or provide temporary relief measures such as reduced repayments, a repayment pause, an extended loan term, or a loan restructure.

“Clearly outline what has changed, what you can realistically afford, and provide any supporting information requested.

“This can help you and your lender agree on a sustainable arrangement that gets you back on track.”

He added that borrowers who are unable to reach a suitable outcome with their lender should consider speaking with a mortgage broker who may have other options.

“Brokers are here to help and have access to a wide variety of lenders, including many that only deal through the broker channel,” he explained.

He said mortgage brokers are obliged by law to act in the customer’s best interest, and will seek to understand the circumstances of the borrower and access available options.

“Lenders often can’t provide a solution because they are limited to their products, but a broker can look for solutions that suit your individual circumstances.”

Mr Gagic said his message to borrowers facing mortgage stress and default is not to panic but seek practical solutions.

“Start the conversation early because there may be more options than you realise.”