The proportion of Australians at risk of defaulting on credit payments has jumped 3.8% in the first half of 2025, reversing previous declines.
The finding has come from data collected by credit bureau illion and is based on the credit activity of millions of Australians.
The bureau's newly released Consumer Stress Barometer report identifies renters and young families on low incomes are the hardest hit, facing mounting pressures due to rising living costs, shrinking financial buffers, and limited access to relief.
While mortgage holders may be seeing some stabilisation amid two interest rate cuts so far this year, illion's head of modelling Barrett Hasseldine said renters have not seen the same relief.
"Default risk is quietly rising again, particularly among borrowers with no property equity, limited savings, and rising debt commitments," Mr Hasseldine said.
"Many young families are being stretched financially. They're juggling rising costs and turning to credit to stay afloat."
The credit default risk for households with dependents rose by 6.3%, almost twice the national average, the report found.
It identified credit card delinquency among 25-39-year-olds has jumped by 8% as households increasingly rely on revolving credit to manage essential costs such as food, rent, and fuel.
Pressure still on for many Australians
Official figures agree that while financial stress has stabilised for some Australians, many households continue to experience pressure on their cashflows.
In its 'Resilience of Australian Households and Businesses Report' in April 2025, the Reserve Bank of Australia (RBA) estimated around 3% of Australians were currently experiencing a cash flow shortfall.
But its measure was through the lens of meeting home loan repayments.
However, the RBA's latest credit growth data, released earlier this month, concurs there's been an uptick in personal credit so far in 2025 after a tapering the previous year.
The Bank of International Settlements also reports Australians had seen a slight rise in the household debt servicing ratio to 17.5% in the last quarter of 2024.
Its 2025 data is still being collated but Australia currently records one of the highest household debt servicing ratios in the developed world.
Illion's data covers a broad range of credit products and activities including credit accounts, bill repayments, credit inquiries, loan defaults and arrears, spending behaviours, and court judgements.
Its Consumer Stress Barometer tracks the probability of Australian consumers defaulting on their credit agreements within the next 12 months, measuring the percentage change against a January 2022 baseline.
Illion's warning to credit providers
While illion may have a vested interest in spruiking its data to lenders, it has warned credit providers to be better across borrower risk.
"It's essential lenders continuously profile and reassess risk, not just at the point of onboarding, but throughout the lifecycle of the loan," Mr Hasseldine said.
"The challenge for lenders is how to proactively identify and support these borrowers before they fall into arrears."
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
