The proportion of home owners falling behind on their mortgage repayments has hit an eight-year high as persistent inflation and high interest rates put many households' finances in a vice grip.
Ratings agency Fitch released its Australian Mortgage Market Index on Thursday, which says 0.48 per cent of mortgage holders are in arrears by 30-59 days, as of the first quarter of the year.
That's an increase of 0.3 per cent from the previous quarter, taking the measure to the highest level it's been at since February 2016.
Overall 30+ day arrears rose by 9 per cent to 1.3 per cent – the third successive increase.
"Historically, arrears increase in the first quarter due to Christmas spending, but this increase is smaller than in prior years," Fitch said.
"This most likely indicates that persistent inflation and the 4.25pp hike in official interest rates since mid-2022 are affecting some borrowers."
On the other end of the spectrum, the proportion of mortgage holders ahead on their payments dropped from 25.4 to 21.5 per cent, bringing it back down to the level it was several years ago.
"Prepayment rates are now at the lowest level since the beginning of 2021," Fitch said.
"High repayment rates had resulted from greater refinancing activity and competition in the housing loan market, as cash-rate hikes drove borrowers to seek lower interest rates."
Unfortunately, there seems to be little chance of reprieve for those home owners struggling to make or stay ahead on their payments.
Monthly inflation hit its highest level since November yesterday, raising fears that the Reserve Bank's next move will be to increase interest rates, rather than drop them.
Just under 40 per cent of economists are now predicting a rate hike in August, up from 10 per cent before the ABS's inflation data.
Even if Governor Michele Bullock and her board opt to hold the cash rate steady at 4.35 per cent in their August meeting, the next cut appears to only be getting further away.
While most of Australia's major banks are predicting the next cut late this year, the broader financial market isn't expecting rates to drop by 0.25 per cent until November 2025.
