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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Update resultsUpdate
LenderHome LoanInterest 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 TagsFeaturesLinkComparePromoted ProductDisclosure
5.54% p.a.
5.58% p.a.
$2,852
Principal & Interest
Variable
$0
$530
90%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 10% Min Deposit
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Disclosure
5.49% p.a.
5.40% p.a.
$2,836
Principal & Interest
Variable
$0
$0
80%
  • Built and funded by CommBank
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 20% Min Deposit
  • Redraw
  • More details
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Disclosure
5.64% p.a.
5.89% p.a.
$2,883
Principal & Interest
Variable
$250
$250
60%
  • 100% offset
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
  • Offset
  • Redraw
  • More details
  • Easy application. Fast approval. 100% offset.
  • Unlimited additional repayments free of charge.
  • Redraw available - Access additional payments.
Disclosure
5.64% p.a.
5.89% p.a.
$2,883
Principal & Interest
Variable
$248
$350
60%
  • Owner Occupier
  • Variable
  • Principal & Interest
  • 40% Min Deposit
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Image by Mikhail Nilov via Pexels

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