Mortgage Stress Is Forcing Australians to Delay Healthcare — What Borrowers Need to Know in 2026
New research reveals a troubling trend across Australia: nearly one in two mortgage holders are now delaying medical treatment because of rising home loan costs. As the Reserve Bank of Australia continues to tighten monetary policy, the consequences are extending well beyond household budgets and into the nation’s health system.
Finance Hub & Networks (FinHub), a licensed mortgage broker in Sydney, Australia (ACL 573164), examines what this means for borrowers and the options worth exploring.
The Data: Half of Borrowers Putting Health on Hold
According to fresh data from Money.com.au, a significant proportion of Australian borrowers are making difficult trade-offs between essential healthcare and mortgage repayments. Among those who delayed medical care:
- 61% skipped dental appointments
- 23% put off specialist visits
- 12% deferred mental health treatment
- 4% delayed surgery or other procedures
With Australians already spending an average of $4,059 per person annually on healthcare, the squeeze from higher repayments is leaving less room for medical expenses — creating a cycle that can worsen both financial and health outcomes over time.
Borrowers Are Tapping Home Loan Accounts for Medical Bills
Perhaps more concerning is the growing trend of borrowers using offset or redraw accounts to cover healthcare costs. Money.com.au data shows that around 50% of borrowers are drawing from these facilities to pay for medical expenses or elective surgery, particularly when public system waiting times are too long.
While offset and redraw facilities can provide a financial buffer, it’s important to understand the trade-off: withdrawing funds means paying more interest over the life of the loan. In effect, a medical bill paid through a home loan redraw becomes a long-term debt that accrues interest for years — or even decades.
Mortgage Stress Ticks Higher After March Rate Hike
Roy Morgan analysis shows that 24.9% of home loan customers — approximately 1.32 million borrowers — were classified as “at risk” of mortgage stress in the three months to February 2026. This figure rose one percentage point after the RBA’s latest rate hike in March, when the cash rate was lifted 25 basis points to 4.10%.
The RBA cited ongoing inflationary pressures linked to capacity constraints and sharply higher fuel prices from the Middle East conflict. The board voted 5–4 in favour of the increase, indicating a closely contested decision.
Adding to the pressure, Westpac has revised its outlook and now forecasts the cash rate could peak at 4.85% — which would be the highest level since the Global Financial Crisis. If further hikes materialise, the share of borrowers at risk of stress could increase substantially.
What Options Can Borrowers Explore?
While every borrower’s situation is different, there are several strategies worth discussing with a qualified mortgage broker:
1. Review Your Current Home Loan Structure
Many borrowers haven’t reviewed their loan since settlement. Rates, features, and lender products change frequently. A home loan health check can identify whether your current product is still competitive or whether there may be more suitable options available through one of the 35+ lenders on a broker’s panel.
2. Consider the Role of Fixed vs. Variable Rates
With further rate increases forecast by some economists, some borrowers may consider fixing a portion of their loan to provide repayment certainty. However, fixed rates also come with limitations — such as restrictions on extra repayments and potential break costs. Both options carry benefits and risks that depend on individual circumstances.
3. Reassess Your Budget and Offset Strategy
If you’re using offset or redraw to cover everyday expenses, it may be worth reviewing your overall household budget. A broker can help model different scenarios to show the long-term cost impact of drawing from these facilities.
4. Don’t Wait Until You’re in Financial Difficulty
Reaching out to your lender or broker early — before repayments become unmanageable — can open up options such as hardship provisions, repayment holidays, or restructuring. Waiting too long can reduce the options available.
Frequently Asked Questions
What is mortgage stress and how many Australians are affected?
Mortgage stress occurs when a borrower’s home loan repayments consume a large enough portion of their income to put financial pressure on other essential expenses. According to Roy Morgan, approximately 1.32 million Australian borrowers — around 24.9% of mortgage holders — were classified as at risk of mortgage stress in early 2026.
Why are borrowers delaying healthcare because of home loans?
Rising interest rates have increased monthly mortgage repayments significantly since early 2024. With household budgets stretched, many borrowers are prioritising loan repayments over discretionary and even essential spending, including dental visits, specialist consultations, and mental health treatment.
Is it a good idea to use my offset or redraw for medical expenses?
While offset and redraw accounts can provide a buffer for unexpected costs, using them for large expenses effectively adds that amount back to your mortgage balance. This means you’ll pay interest on those withdrawn funds over the remaining life of your loan. It’s worth speaking with a mortgage broker to understand the full cost before making a decision.
How high could interest rates go in 2026?
Forecasts vary among economists and financial institutions. Westpac has projected the cash rate could reach as high as 4.85%, while other forecasters hold different views. Rate movements depend on inflation data, global economic conditions, and RBA policy decisions. No forecast is certain, and borrowers should consider a range of scenarios when planning their finances.
How can a mortgage broker help during times of financial pressure?
A mortgage broker can review your current loan structure, compare options across multiple lenders, model repayment scenarios under different rate environments, and help you understand what restructuring or refinancing options may be available. Finance Hub & Networks compares options across 35+ lenders to help borrowers explore what may work for their situation.
Take the Next Step
If rising repayments are putting pressure on your household budget, a no-obligation conversation with a qualified broker can help you understand your options. Contact Daniel Nguyen at FinHub — call 1300 346 482 or visit finhub.net.au to book a consultation.
Finance Hub & Networks Pty Ltd — Australian Credit Licence 573164. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.
#finhub #mortgagestress #homeloan #australianproperty #mortgagebroker #refinancing #interestrates #RBA #sydney #propertymarket #financialwellbeing #healthcare
