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Average mortgage repayments peaked in February, when 31.3 per cent of the average income was going towards home loan debt, according to new data.
New analysis from Westpac’s DataX Consumer Panel has found that mortgage repayments hit a new record in February 2025, before coming down following the central bank’s move to cut the official cash rate.
Developed by DataX (Westpac’s data analytics team), the dataset links transaction activity with balance sheet information to give an overview of income, spending, saving, and borrowing flows for over 1 million customers.
According to the data, average mortgage repayments surged by 42.2 per cent (around $754) between 2022 and January 2024, far outpacing income growth, which grew by 8.5 per cent over the same period.
Repayments peaked in February 2025 at $2,741 – or 31.3 per cent of income – before coming down in March after the Reserve Bank of Australia reduced the official cash rate by 25 bps in February.
Early indications from Westpac showed that average mortgage repayments fell 0.5 per cent (or around $12) in March, equivalent to around 0.1 per cent of income, marking the first decline in minimum repayments since December 2021.
The peak in repayments came during a period when Australian consumer housing debt increased significantly, with average mortgage balances rising by 9.5 per cent – or over $360,000 – between 2021 and March 2025. Indeed, borrowers owed Australian banks a record high of $2.3 trillion according to recent stats from the prudential regulator.
Nationally, DataX found that average mortgage balances grew by 3.7 per cent over the past year, aligning with a 3.5 per cent national housing price increase, though Queensland, South Australia, and Western Australia saw housing prices rise more sharply (8.9–12.4 per cent) than their mortgage balances (4.4–5.1 per cent).
Savings buffers also declined over the most recent rate-hiking cycle. The data showed that while the average borrower could cover up to 19 months of essential expenses in 2022, by March 2025, this had declined to 16 months. For mortgage repayments alone, buffers declined from 31 to 24 months.
Those in the top tax bracket have around 18 months of buffer reserve, according to DataX, nearly 30 per cent more than the highest group. At the other end of the scale, households in the lowest tax bracket have buffers of around 10 months, down slightly from a peak of 12 months.
Younger Australians (aged 18-24) with a mortgage were also found to have the lowest financial buffers, with just seven months of essential expenses saved - less than half the average - despite improving their position faster than any other age group.
The drop in buffers has primarily been due to rising essential expenses – particularly mortgage costs – only partly offset by increased savings. Lower-income households have trimmed spending on food and groceries, helping preserve buffers, while the highest income cohort appears to be drawing down on savings to fund discretionary spending, eroding their buffers.
Geographically, mortgage holders in almost all states have over a 12-month buffer, with NSW leading the way at 19 months. Tasmania falls short of this with buffers of around eight months, on average.
Westpac said, however, that despite the decline, mortgagors remain in a relatively strong position given they typically have more than a year’s worth of savings behind them. The average savings balances for mortgage holders were approximately $65,000 in March 2025, up by around 15 per cent on mid-2022.
DataX found that average savings balances have continued to grow strongly generally, with the average consumer panel member having around $38,000 in savings.
Westpac economist Neha Sharma commented: “Overall, while household financial resilience has weakened since 2022, most households remain well-positioned to meet their essential expenses, including mortgage repayments.
“Looking ahead, financial resilience should strengthen as real household disposable incomes recover and interest rates decline further. While some deterioration in the labour market is anticipated, mortgage holders have historically weathered periods of rising unemployment relatively well,” it said, noting that Westpac anticipates further rate cuts throughout 2025, which could provide additional relief for borrowers.
[Related: Borrowers owe banks more than $2.3tn in mortgages]
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