Mortgage stress generally refers to households spending a large portion of their income on home loan repayments, leaving little left over for other expenses or savings.
With interest rates stabilising and some borrowers rolling off higher fixed rates, many households are finding it slightly easier to keep up with repayments. That’s great news – but it doesn’t mean the risks have disappeared.
The cost of living is still elevated, and any unexpected change – like a job loss, illness, or future rate changes – can quickly put pressure back on the budget. This is why it’s still important to be cautious, particularly when it comes to credit cards and holiday spending.
Australians are spending big on credit cards
The Reserve Bank of Australia recently reported that Australians made a record 305.4 million personal credit card transactions in August, an increase of 3.9% on the year before. That’s a lot of tapping, swiping and online checkouts.
With Christmas approaching, it’s easy to see how this trend might accelerate. There are gifts to buy, events to attend, holidays to book and “limited-time” sales around every corner. But leaning too heavily on credit can undo some of the relief households are starting to feel on their mortgages.
Two reasons to go easy on credit this Christmas
1. Avoid a debt hangover
The festive season is short – but debt can linger well into the new year.
When you use a credit card, interest adds up fast if you’re not paying off the full balance each month. What starts as a few hundred dollars in extra Christmas spending can quickly grow once interest and fees are added.
A “debt hangover” can:
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Eat into your savings or emergency buffer
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Make it harder to keep up with everyday expenses
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Add stress just when you thought you were getting ahead again
Before putting something on the card, ask yourself: Will I still be happy paying this off in three or six months’ time?
2. Protect your borrowing power
If you’re thinking about buying a property, refinancing, or investing in the near future, your credit behaviour matters.
When lenders assess a home loan application, they don’t just look at your income and your current mortgage. They also look at:
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Your total credit card limits (not just what you owe)
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Any personal loans, buy-now-pay-later accounts and other debts
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Your repayment history and how you manage existing commitments
High limits, large balances or a lot of short-term debt can reduce how much you’re able to borrow – or even lead to a declined application. Big holiday splurges on credit may feel harmless in December but could affect your borrowing power in the months that follow.
Practical tips to stay on track this festive season
If you’d like to enjoy Christmas without compromising your financial goals, here are a few simple strategies:
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Set a spending limit for gifts, entertainment and holidays – and stick to it.
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Use cash or debit where possible so you’re only spending money you already have.
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Reduce unused credit limits if they’re higher than you need.
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Plan ahead for January and February bills, like school fees, insurances, or registrations.
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If you already have credit card debt, consider a repayment plan to clear it as soon as possible.
Thinking about buying or refinancing?
If you’re planning to buy your first home, upgrade, invest or refinance in the coming year, now is a great time to review your situation:
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How much can you comfortably afford to borrow?
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Are your current debts or credit limits holding you back?
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Could refinancing help improve your cash flow or provide more stability?
Talking to a mortgage professional can help you understand how your current spending and debts might impact your options – and what steps you can take now to put yourself in a stronger position.
The bottom line
Mortgage stress may be easing, but that doesn’t mean it’s time to overspend. By being mindful of credit use this Christmas, you can:
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Avoid a painful debt hangover, and
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Protect your borrowing power for future home and investment plans.
If you’d like a personalised look at your situation or want to explore your options for buying or refinancing, feel free to get in touch – I’m here to help you make smart decisions with your home loan and your future.
