Spiralling living costs and the interest rate hikes needed to rein in rising prices are taking a toll and have triggered the highest rates of financial hardship since the start of the pandemic.
Four in 10 Australians are experiencing some form of financial difficulty, which is the highest number recorded by NAB's hardship survey since the early days of the COVID-19 outbreak.
The elevated December quarter results follow steady increases in reported hardship over three years.
Those experiencing hardship may be struggling to pay bills and rent, not have enough money to buy food, are falling short on mortgage or loan repayments, or don't having enough money to fund an emergency.
"Financial hardship can happen at any time, and is often the result of sickness, job loss or over-commitment," the NAB report said.
"Rapidly rising interest rates and cost of living are now also causing financial distress in more households."
Despite aggressive interest rate hikes driving up repayments for those with variable rate loans, the inability to meet mortgage repayments was the lowest contributor to the high rates of financial stress.
The survey of 2000 Australians found just one in 20 respondents were struggling to meet their home loan obligations, compared to one in five people who had missed paying a bill in the past three months.
The Australian Bureau of Statistics is due to release its latest lending data on Friday, which is expected to show a fall in home lending of around three per cent.
Meanwhile, Housing Minister Julie Collins has revealed the government's Regional First Home Buyer Guarantee has helped more than 2000 people into home ownership.
The scheme launched in October provides a government guarantee of up to 15 per cent for eligible first home buyers, so regional Australians with a deposit of as little as five per cent can avoid paying lenders' mortgage insurance.
Almost half of the participants are in regional Queensland, while 38 per cent are from NSW.
"We want more Australians to have a safe place to call home, and this is just one way we are already delivering," Ms Collins said.
© AAP 2023