The Victorian Government is injecting $4 million into Mortgage Stress Victoria, expanding free legal and financial services for homeowners under pressure.
The initiative, starting 1 May 2026, raises the eligibility income threshold from $75,000 to $90,000, allowing more middle-income households to access critical support.
Consumer Affairs Minister Nick says with the RBA’s cash rate decisions putting pressure on household budgets, services like this have never been more important for Victorian families
“Mortgage Stress Victoria provides a vital role in helping Victorians stay in their homes and avoid the devastating impact of mortgage stress.” said Staiko
“We will always be in the corner of Victorians doing it tough – which is why we launched free public transport for kids across the state this year, the $100 power saving bonus, and capped fuel price increases.” he said.
The funding aims to help Victorians manage mortgage pressures, prevent forced home sales, and provide targeted assistance to victims of family violence, who make up roughly one-third of the service’s clients. Since 2022, Mortgage Stress Victoria has helped prevent over 190 repossessions.
Eligible homeowners must live in their mortgaged primary residence and own no other properties.
The expanded services include free legal advice, financial counselling, and social work support, covering everything from early repayment concerns to navigating court orders related to repossession.
Victorian Mortgage Holders Face Growing Financial Pressure as Rate Hikes Loom
Victoria has emerged as one of Australia’s most vulnerable states for mortgage stress, with 27.2% of mortgage holders now classified as ‘At Risk’ — the second-highest rate in the nation after Tasmania.
The situation could worsen dramatically if the Reserve Bank raises the cash rate again at its March meeting, following its February increase to 3.85%
Following the RBA’s February hike, the lowest variable rate from the big four banks is 5.49% from Westpac, while fixed rates range from 5.39% (NAB two-year) to 5.59% (CBA two-year).
All four major banks — CBA, NAB, ANZ, and Westpac — have passed on the full 0.25% increase to customers.
The central bank’s dramatic policy shift followed inflation doubling from 1.9% in June 2025 to 3.8% by January 2026. After three rate cuts in 2025 that took the cash rate from 4.35% to 3.6%, the RBA abruptly reversed course in February.
Three of the four major banks now forecast another rate increase in May, which would take the cash rate to 4.1%. The RBA’s updated forecasts show underlying inflation won’t return close to the target band’s midpoint until June 2028 — more than two years away.
For Victorian mortgage holders with a $600,000 loan, the February rate rise added approximately $90 to monthly repayments, with further increases likely if the RBA continues tightening.
With the rising cost of living and interest rate pressures, the government says the expanded program will provide a lifeline for households struggling to maintain their homes.
