The latest industry data continues to show that a portion of borrowers are finding it harder to keep up with repayments after a long period of higher living costs, higher loan servicing costs and tighter household budgets. This does not mean credit has stopped flowing, but it does mean lenders are likely to keep paying close attention to income stability, existing debts, spending patterns and the amount of buffer left after repayments are met.

For home loan customers, the practical issue is serviceability. A borrower may feel comfortable with a repayment based on a current advertised rate, but the real test is whether that repayment still works after allowing for insurance, council rates, utilities, childcare, transport, groceries and unexpected expenses. Before refinancing, upgrading, investing or taking on a new mortgage, it is worth taking time to model repayments under more than one scenario, including a conservative case where costs remain elevated for longer.

Small business owners face a similar challenge, although the pressure often appears through cash flow rather than weekly household spending. If customers pay late, supplier costs rise or seasonal revenue falls, a manageable loan can quickly become restrictive. Lenders may look beyond turnover and consider margins, tax debts, invoice timing, director commitments and whether the business has enough working capital to absorb a quieter trading period.

The key takeaway is not to avoid borrowing altogether. Well-structured finance can still support growth, consolidation, equipment purchases, property plans and essential personal needs. The point is to be more deliberate about structure, term, fees and flexibility. Borrowers should check whether extra repayments are allowed, whether redraw or offset features are genuinely useful, and whether a cheaper headline rate comes with conditions that limit future options.

For anyone preparing an application, three steps are especially useful:

• Review current income, expenses and debts before assuming borrowing capacity has stayed the same.
• Compare the total cost of finance, including fees and loan term, rather than focusing only on the advertised rate.
• Keep documents up to date so lenders can assess the application clearly and consistently.

In a market where arrears remain a warning light, stronger preparation can make a real difference. Taking time to compare options and stress-test repayments may help borrowers choose finance that fits their real cash flow, not just their best-case budget.