Daniel Foster – Senior Editor, Economy
A new report reveals that 61 per cent of Australians feel financially worse off than they did a year ago, with households across the country grappling with prolonged inflation, rising insurance costs, and higher mortgage repayments. According to the Household Budget Barometer 2026 report, published by Compare the Market, the sustained cost-of-living pressure has led to widespread financial fatigue and difficult daily sacrifices.
The nationally representative survey of more than 3,000 Australians indicates that 85 per cent believe inflationary pressures have lasted longer than expected, while just 9 per cent think the cost of living is improving. Furthermore, 61 per cent describe themselves as financially fatigued and less capable of making proactive money decisions, with that burnout peaking among individuals aged 35 to 44.
The report details significant increases in everyday expenses over recent years. Home and contents insurance quotes have climbed by about 26 per cent across Australia’s five biggest capitals over a two-year period, adding roughly $599 to annual household costs.
Car insurance quotes rose by around 21 per cent, or $375, over the same timeframe. Australians with private health insurance are now paying an average of $2,713.53 annually, while average mortgage repayments have doubled over five years due to larger loan sizes and higher interest rates.
Compare the Market Economic Director David Koch described the toll on households as an era of “budget burnout,” noting that the Reserve Bank of Australia has raised the cash rate multiple times.
“Australians need to see the finish line,” Koch said.
Mr Koch said.
Right now, every time households feel like they’re getting closer, the chequered flag shifts further down the track. No wonder it feels like we’re stuck in reverse. Mr Koch
The financial strain has forced many to make severe cutbacks. “People have told us they are skipping holidays, abandoning routine appointments and missing important family events, such as interstate weddings and funerals,” said Compare the Market Economic Director David Koch.
In more severe cases, individuals have resorted to skipping meals, limiting showers, and keeping lights off to make ends meet. Mr Koch also highlighted a counterproductive cycle where financial exhaustion discourages people from shopping around for better deals, noting that staying put often results in paying more.
Mortgage holders have faced mounting pressure following multiple cash rate increases from the Reserve Bank of Australia in 2026, which pushed the cash rate to 4.85 per cent—the highest level since November 2008. Canstar Data Insights Director Sally Tindall urged homeowners who are struggling to make payments to contact their banks before missing a deadline.
“You pick up the phone and you say three words: ‘financial hardship support’,” Tindall said.
Ms Tindall told Sunrise, according to reporting by 7NEWS.
Under the National Consumer Credit Protection Act, invoking hardship obliges lenders to assess applications and reply within 21 days. Hardship options can include switching to interest-only payments for a period, making reduced payments, or extending the loan term. However, Ms Tindall advised borrowers to first seek personal financial advice and ask their bank for a rate review before pursuing formal hardship measures.
