RBA October 2026 Review: Reading the Housing Equity Scenario

What the new review says

The RBA's October 2026 Financial Stability Review, released on 1 October, estimates that fewer than 1% of borrowers owe more than their property's value. In a scenario with a further uniform 20% fall in housing prices, around 5% of mortgages would be in negative equity.

The 20% fall is a scenario, not a prediction. These figures describe a modelled loan population, not the probability of a particular borrower losing their home. The review's overall data cut-off was 25 September 2026.

Use the Property Value Change Calculator to examine the arithmetic of an assumed price movement. Keep the starting value, loan balance and percentage assumption visible.

What changed, and who may be affected?

The new review updates the RBA's assessment of household resilience. It reports that housing-loan arrears remain low despite increased financial pressure. Recent buyers and borrowers who started with high loan-to-value ratios are more exposed to negative equity. The analysis draws on the RBA's Securitisation System and includes adjustments for dataset bias.

Source: RBA household and business resilience chapter. This is an aggregate assessment. It does not establish an individual property's value or a lender's refinancing decision.

Worked example: the same price fall, different equity

Consider two invented households whose homes each have an assumed current value of $800,000. One owes $480,000 and the other owes $720,000. Hold both loan balances constant and apply the same 20% value fall.

The property-value reduction is $160,000 in both cases. It removes half of A's starting equity and more than all of B's starting equity. That difference comes from the debt entered, not a different movement in the property price.

The examples do not reproduce the RBA's model. They exclude principal repayments during the period, new borrowing, selling costs and differences between individual properties. A 20% uniform fall is deliberately an assumption in this table, not a local valuation.

Equity, cash flow and sale proceeds answer different questions

An equity calculation subtracts secured debt from property value. A repayment budget compares scheduled payments and other spending with income. A sale estimate subtracts selling costs and the lender payout from an assumed sale price.

For household B, the table alone cannot tell us whether monthly repayments are being made. For household A, $160,000 of mathematical equity does not mean $160,000 is available in a bank account or approved for borrowing.

Check those questions separately:

• Use the Home Equity and LVR Calculator for a value-and-debt snapshot.
• Use the Mortgage Repayment Calculator with the loan's actual rate and remaining term for an indicative repayment.
• Read home equity versus net sale proceeds before treating equity as a moving budget.
• Read the mortgage buffer worksheet to separate accessible cash from property equity.

What changes in the calculators?

This review does not introduce a new transfer-duty rate, tax threshold or repayment formula. No calculator methodology changes follow from the scenario. In particular, the assumed 20% fall should not become a default property-growth forecast.

A user can enter different value scenarios while keeping the starting debt unchanged, then separately examine a different debt balance. Labelling which input changed makes the result easier to interpret.

What remains uncertain

A national scenario cannot identify a future sale price, lender valuation or household cash-flow outcome. The review's publication date is later than the observations used in its analysis. Its figures should not be presented as a live count of loans today.

This article does not forecast prices, defaults, mortgage rates or future policy. For the separate September cash-rate decision, see the September 2026 RBA update.

Sources and limitations

• RBA: October 2026 Financial Stability Review, household and business resilience, checked 3 October 2026.
• RBA: October review contents and data cut-off, checked 3 October 2026.
• RBA: Financial Stability Review publication schedule, 1 October release date checked 3 October 2026.
• The two-household table is original illustrative arithmetic, not RBA microdata.

General information and indicative examples only. This is not a valuation, forecast, financial, legal, tax or credit advice, lending approval or investment recommendation. Confirm property-specific information and loan terms with the relevant professionals.

Last updated: 3 October 2026.