Higher Rates Are Biting — But the RBA Says Most Borrowers Are Still Holding Up
The RBA says most Australian borrowers remain resilient, but around 2 per cent of variable-rate owner-occupiers face a cash-flow shortfall.
3 min
The Reserve Bank’s October stability review finds that most borrowers remain resilient, even as a small but important group experiences cash-flow shortfalls and investor activity remains a source of potential market amplification.
Australian borrowers have absorbed higher interest rates better than many feared, but the averages conceal a small group under genuine pressure.
The Reserve Bank’s October 2026 Financial Stability Review estimates that around 2 per cent of variable-rate owner-occupier borrowers are experiencing a cash-flow shortfall — meaning essential spending and scheduled mortgage payments exceed income. That is a minority, yet in a mortgage market containing millions of loans it is not insignificant.
The broader picture is more resilient. Most mortgagors continue to service their debts, helped by strong employment, income growth, savings buffers and the capacity to reduce discretionary spending. Many households also entered the tightening cycle with substantial equity, limiting the risk that a forced sale would leave debt outstanding after the property changed hands.
For owner-occupiers, the report reinforces the difference between repayment discomfort and insolvency. A household may feel materially poorer after a rate increase without being unable to pay. The danger rises when several stresses arrive together: reduced working hours, illness, separation, expiring interest-only terms or a major unexpected expense.
That is why borrowers should focus on liquidity, not only equity. A home can be worth considerably more than its mortgage while the owner still struggles to meet this month’s repayment. An offset balance or accessible savings buffer can therefore matter more in the short term than a strong paper gain.
Investors face a different calculation. The RBA notes that investor housing activity can amplify property-price cycles because investors may respond more quickly than owner-occupiers to changing expected returns. Rising rates increase holding costs, while rent, vacancy, maintenance, land tax and insurance determine whether an asset remains cash-flow sustainable.
Investor lending has moderated from elevated levels, although it remains an area watched by regulators. APRA’s June-quarter data showed investment loans represented 31.2 per cent of outstanding residential mortgage credit and 35.6 per cent of new residential lending. It also showed that 8.9 per cent of new investor loans had a debt-to-income ratio of six times or more, compared with a lower share across new lending overall.
High debt-to-income lending is not automatically poor lending. A borrower may have substantial assets, reliable income or a clear deleveraging plan. But leverage leaves less room for error when rates rise or income weakens. Investors should stress-test repayments above the current rate, allow for periods without rent and budget for irregular capital expenses rather than treating gross rent as spendable income.
The RBA’s assessment does not amount to a forecast that mortgage stress will disappear. Financial stability can remain sound while individual households experience serious hardship. Borrowers who expect difficulty should contact their lender early; hardship arrangements are generally more effective before arrears compound.
For prospective buyers, the practical message is not to assume that system-wide resilience makes every loan safe. Purchase price, deposit, loan structure and cash reserves still determine personal risk. For investors, the discipline is sharper: evaluate the property on net cash flow, realistic rent and a conservative interest-rate assumption, not on the hope that capital growth will solve an overextended balance sheet.
Australia’s mortgage market is bending rather than breaking. The RBA’s two-per-cent estimate shows, however, that resilience is not evenly shared — and prudent borrowers should build their finances for the possibility that their own circumstances will not resemble the average.
Borrower dashboard
Variable-rate owner-occupiers in cash-flow shortfall: Around 2 per cent, RBA estimate
Total residential mortgage credit: $2.5585 trillion at June 2026, APRA
Investor share of outstanding residential credit: 31.2 per cent
Investor share of new residential lending: 35.6 per cent
New investor loans at DTI of six or more: 8.9 per cent
A Sydney couple has paid $15.5 million for the Grand Penthouse at Marquee’s $285 million La Belle Residences beachfront development which is nearing completion at Palm Beach, eclipsing the record for an off-the-plan apartment sale on the southern Gold Coast. The sprawling single level 640 sqm beachfront residence, with sweeping views of the Gold Coast …
Continue reading “$15.5m La Belle Penthouse eclipses southern Gold Coast record”
On the owner’s deck, a 20-metre swimming pool incorporates Feadship’s patented ContraWave technology and extends indoors as a suspended, glass-bottomed infinity pool.
4 minA Sydney couple has paid $15.5 million for the Grand Penthouse at Marquee’s $285 million La Belle Residences beachfront development which is nearing completion at Palm Beach, eclipsing the record for an off-the-plan apartment sale on the southern Gold Coast.
The sprawling single level 640 sqm beachfront residence, with sweeping views of the Gold Coast north and south, beats the previous record of $14.6 million, set at the Sur Kirra Beach penthouse in Coolangatta in December 2025, and comes in 70 per cent above Palm Beach’s apartment suburb record of $9.1 million.
The buyer plans to make it their permanent home as they relocate to the Gold Coast. The result marks a turning point for Palm Beach. The suburb was once a quiet stretch of beach between Burleigh Heads and Currumbin and now ranks among the country’s most sought-after coastal addresses.
The sale also shows how the top of the market is changing, according to Jacques Winterburn of Marquee, one of Southeast Queensland’s most active private developers.
“For a long time the southern Gold Coast was where people came for holidays. Wealthy interstate buyers are no longer just buying holiday homes here, they are relocating,” Mr Winterburn said.
“These are people who live on Sydney Harbour. They had already decided to relocate to the Gold Coast, and what took the time was finding the right property in the right location. They chose the northern end of Palm Beach. The comparison has changed. They’re weighing Point Piper and Bondi against the premium end of Palm Beach. Absolute beachfront, genuinely quiet, Tallebudgera Inlet a short walk away and Burleigh minutes up the road without the noise and busyness that comes with living there. On space, beach access and lifestyle, this wins.”
The Grand Penthouse is built on the scale of a large house. It has 510 sqm of internal living space and a 130 sqm balcony, five bedrooms each with its own ensuite, a private cinema, an executive office, a wine display and multiple living areas. The hallways are two metres wide, which is almost unheard of in an apartment design.
The building sits on over 40 metres of absolute beach frontage. The penthouse itself runs 34 metres along the beachfront, one of the widest new apartments on the Gold Coast, and occupies a single level, so there are no stairs. Its 270-degree views run uninterrupted from Burleigh Headland and the Surfers Paradise skyline south to Currumbin and Snapper Rocks.
The couple moved quickly, committing within about a month after inspecting completed Marquee buildings across the Gold Coast and bringing friends along for a second opinion.
“They did their homework, but once they had seen the finished buildings the decision came easily,” sales and marketing spokesman Azura Griffen said. “At this price level, buyers wanted to walk through projects we had completed years ago, not look at renders. Track record and trust in delivery are the whole conversation.”
What took longer was the residence itself. Over the following months the couple worked with Marquee to customise the penthouse, reworking the layout so that every key living space looks out over the ocean.
“They knew exactly what they wanted. The ocean had to be in every room, the kitchen, the dining room, the master bedroom, the office,” Ms Griffen said. “Because Marquee is both the developer and the builder, we could work through those changes with them.”
Ms Griffen said the building being close to completion has given buyers confidence.
“Buying off the plan at this level is about trust. Buyers can now walk the site, see the finishes and stand on the balconies. Once they’ve done that, the decision usually makes itself.”
La Belle Palm Beach is due for completion by Christmas 2026. Marquee has already secured its next absolute beachfront site, in the same pocket at the northern end of Palm Beach, with a launch planned for early next year.
“We have a number of buyers who love the northern end of Palm Beach for the same reasons, a quiet serene beach, close to thetranquil waters of Tallebudgera, yet minutes from the restaurants of Burleigh Heads,” Ms Griffen said. “That feedback is why we secured our next site in the same pocket.”
“It will be more boutique, with larger apartments of 190 to 300 sqm and the same world-class amenity. It will be our best beachfront building yet.”
“We are already taking enquiry and pre-registrations, much of it from buyers who missed out at La Belle and want to make sure they do not miss the next one.”
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