Stress-Testing Your Own Budget at +3%

Key takeaways

• APRA has held the serviceability buffer at 3.0 percentage points, so most 2026 borrowers are assessed near 9.25–9.5%.
• On a $750,000 loan, moving from 6.5% to 9.5% lifts the repayment from $4,740 to $6,307 — an extra $1,567 a month.
• Mortgage stress is conventionally measured as housing costs above 30% of gross household income.
• 421,725 Australian households across 80 postcodes were recorded in mortgage stress in June 2026, up 18% year on year.

What does +3% look like in dollars?

Comparing your current repayment to the buffered one, on a 30-year term:

This is the repayment your lender already decided you could manage. The question is whether your household budget agrees.

How do you run the test?

1. Find your buffered repayment from the table, or recalculate at your rate + 3%.
2. Divide by your gross monthly household income. Above 30% is the conventional stress threshold.
3. Subtract it from your actual take-home pay along with every fixed cost — insurance, school fees, energy, transport, childcare.
4. Look at what remains. If it is negative, you have identified the gap before your lender does.

Worked example: a household on $180,000 gross ($15,000 a month) with a $750,000 loan. The buffered repayment of $6,307 is 42% of gross income — well past the stress threshold, even though the actual repayment of $4,740 sits at a more comfortable 32%.

Why hold the buffer at 3%?

APRA has kept the buffer at 3.0 points rather than trimming it, on the view that the risk is not only further rate rises but also income disruption, higher living costs and the possibility that a borrower's circumstances change over a 30-year loan.

The buffer is also a brake on borrowing capacity. At 9.5% assessed rather than 6.5%, the maximum a given income can support falls by roughly 25%. That is deliberate: it is one of the levers that stops credit growth outrunning income.

What if you fail your own test?

Failing the test is information, not a crisis. Practical responses in order of how quickly they act:

• Reprice or refinance. Existing borrowers frequently pay more than new ones at the same lender. Ask for the new-customer rate before anything else.
• Build the buffer deliberately. Direct the difference between your actual and buffered repayment into an offset for three months and find out whether it is survivable.
• Extend the term. Returning a 22-year remaining loan to 30 years reduces the repayment substantially, at the cost of more total interest.
• Apply for hardship early. Assistance under the Banking Code is available before you default, not only after.

Frequently asked questions

Is the 30% mortgage stress rule reliable?

It is a rough screen, not a diagnosis. A household on a high income can commit 40% to housing and remain comfortable, while a low-income household can struggle well below 30%. Measuring what is left after all fixed costs is a better test than the ratio alone.

Does the buffer apply when I refinance?

Generally yes, which is what creates so-called mortgage prisoners — borrowers who cannot pass another lender's buffered assessment despite meeting their current repayments. Some lenders apply a modified assessment for like-for-like refinances where the borrower is not increasing their debt.

Where can I get free help if the numbers do not work?

The National Debt Helpline (1800 007 007) provides free, independent financial counselling across Australia. Contacting them early gives more options than waiting until arrears have accumulated.

Related reading

• How a 0.25% Rate Rise Changes Repayments, by Loan Size
• Offset Account Maths: Dollar-for-Dollar Savings Modelled
• Weekly vs Fortnightly vs Monthly Repayments: The 13th Payment Effect

Sources

• Prudential Practice Guide APG 223 Residential Mortgage Lending — APRA
• Mortgage stress research, June 2026 — Roy Morgan
• Financial counselling and the National Debt Helpline — ASIC Moneysmart