NAB Warns of Rising Mortgage Arrears — What Australian Borrowers Need to Know

NAB Warns of Rising Mortgage Arrears — What Australian Borrowers Need to Know

National Australia Bank (NAB) has signalled growing concern about mortgage arrears, with industry sources reporting that some players are beginning to whisper about the possibility of increased loan defaults in the months ahead. The warning comes as household budgets remain stretched by elevated interest rates and rising living costs.

What NAB Is Warning About

According to Australian Broker (April 23, 2026), markets remain on alert following NAB's warning about deteriorating loan performance indicators. Industry participants are increasingly discussing the prospect of higher arrears as interest rate pressure, combined with cost-of-living increases, continues to squeeze borrower budgets.

Australia's current cash rate sits at 4.10% (RBA, effective March 18, 2026), with the next decision due on May 5, 2026. While the RBA held rates steady in March, headline CPI remains at 3.7% (ABS, February 2026), and unemployment has edged up to 4.3% (ABS, March 2026) — factors that keep the rate outlook uncertain.

Who Is Most at Risk

Borrowers most vulnerable to arrears typically share these characteristics:

• High LVR loans taken out near the peak of the market (2021–2022)
• Variable rate loans that have absorbed cumulative rate increases
• Borrowers whose income has not kept pace with repayment increases
• Self-employed borrowers whose business revenue has softened

For self-employed borrowers, the risk profile is different — but often manageable through the right loan structure. Alt Doc products allow borrowers to demonstrate income through BAS statements or accountant letters rather than traditional payslips, which can be particularly helpful when income has been inconsistent across a financial year.

What Borrowers Can Do Now

If you're concerned about your current loan situation, there are proactive steps worth considering:

Review your loan terms: Understand whether you're on a variable or fixed rate, and when any fixed period expires. Refinancing before a fixed rate rolls over can lock in better terms.

Assess serviceability: With many lenders calculating serviceability buffers at 3% above the actual rate, your repayment capacity assessment may be more conservative than your actual position. A non-bank lender assessment may reflect your real circumstances more accurately.

Explore non-bank options: Non-bank lenders often have more flexibility in how they assess income and serviceability, particularly for borrowers with complex financial situations.

MPFG Capital's Perspective

At MPFG Capital, we regularly work with borrowers who come to us after experiencing difficulties with their existing bank — whether that's a rate that's become unmanageable, a loan that's been called in, or a refinancing application that's been rejected. In many cases, a non-bank loan structure offers a practical path forward.

Rising arrears in the broader market don't need to be your story. If your circumstances have changed and your current lender isn't responding with flexibility, it may be time to explore what non-bank alternatives are available.

This article is general information only and does not constitute financial advice. MPFG Capital holds ACL 553698. Speak to a licensed professional about your specific situation.