Consumer credit stress is kicking along, with credit default risk “climbing again, particularly amongst vulnerable borrower segments” credit bureau illion have found.

The June 2025 edition of illion’s Consumer Stress Barometer finds that after a period of relative stability, financial stress indicators “are once again showing signs of strain. The proportion of Australians at risk of credit default increased by 3.8% in the first half of 2025, reversing previous declines.”

This is particularly pronounced among credit card holders in their 20s and families in their 30s with mortgages.

Renters, young families and those on lower incomes are emerging as the most exposed groups, facing mounting pressures due to rising living costs, shrinking buffers, and limited access to relief.

These trends will give pause to finance teams and bank boards finalising their FY2025 results, including setting their provisioning and bad debt charge.

“Across both 30-day delinquency and hardship levels, households are significantly more likely to struggle with servicing their loans today, compared with 12 months ago” illion said.

illion said it saw a 20 per cent rise in combined home loan delinquency and hardship, year on year, in the March quarter.

“This is mainly due to a rise in the hardship rate” illion said.

“The latest figures should serve as a clear warning to lenders,” said Barrett Hasseldine, head of modelling at illion. 

“While mortgage holders may be seeing some stabilisation, default risk is quietly rising again, particularly among borrowers with no property equity, limited savings, and rising debt commitments.”