KAREN JOY BACUDO
Finance Editor
Experian has reported a shift in how Australians prioritise debt repayments under financial stress, with its latest analysis finding that mortgages are no longer consistently the first repayment households protect.
The data points to changing repayment patterns as household budgets come under pressure from higher borrowing costs and living expenses.
Experian examined which credit products were most likely to fall behind first among consumers who held at least two different products and were up to date at the start of a 12-month observation period. It reviewed arrears at 30 and 90 days past due and included only consumers who experienced at least one delinquency during that period.
In the earlier stages of financial stress, credit cards remained among the first products to slip. At more severe levels of arrears, however, the pattern changed: mortgages matched credit cards as the product most likely to fall behind first at 90 days past due in the 12 months to December 2025.
Auto loans stood apart from that trend. They were the least likely product to slip first in the same period, suggesting some households continued keeping up car repayments even as mortgage stress rose.
Segment differences
The analysis also found sharp differences across age groups and household segments. Younger borrowers were less likely to let mortgage repayments fall into severe arrears than other borrowers, while borrowers aged over 55 were more likely to allow a mortgage to slip into arrears before an auto loan.
Among borrowers over 55, mortgages had a 75% probability of slipping before auto loans once accounts reached 90 days past due, according to Experian.
Repayment behaviour also varied by household profile. Using its Mosaic segmentation model, Experian found that affluent suburban households were more likely to fall behind on mortgages under severe stress first, while lower-income, regional, or low-skilled households were more likely to miss credit card and personal loan repayments before a home loan.
This split suggests arrears patterns are not uniform across the market. Housing equity, financial flexibility, and the relative burden of different debts may all influence which bills households choose to pay first.
Warning signals
For lenders, the findings suggest traditional assumptions about repayment order may be a less reliable guide to financial distress than in the past. Mortgages have often been treated as the debt most likely to be protected, but the latest data indicates that is not always the case once stress deepens.
Louis Tsang, Head of Analytics Consulting & Insights at Experian, said the shift meant lenders needed to look more closely at the context around arrears data.
“Our analysis suggests repayment order can change as stress becomes more severe, and it isn’t uniform across all customer segments. For lenders and portfolio teams, the key is to interpret early warning signals alongside customer context, product type and the broader environment to tailor approaches across different customer segments,” Tsang said.
The figures also suggest that a vehicle’s role in day-to-day life may be influencing repayment choices. For many households, access to a car is tied directly to work, school runs, and other essential travel, which may help explain why auto loans were less likely to be the first missed payment under severe pressure.
More broadly, the data suggests households are making more selective decisions as financial strain builds. Credit cards still appear to absorb early stress, but more severe financial difficulty is now showing up in mortgage arrears in ways that challenge older assumptions about the payment hierarchy.