Rising home insurance costs could limit mortgage access in Australia, according to UNSW Business School’s November 2, 2026 analysis. It says climate risk can affect home loans when borrowers struggle to afford cover.
Kristle Romero Cortes, an associate professor at UNSW, said reduced insurance cover can weaken the security behind a home loan. However, she said evidence linking climate risk to changes in prices and lending remains limited.
How insurance costs affect mortgage access
The UNSW analysis contrasts long home loans with insurance that renews each year. During the loan term, borrowers may face higher costs or less cover long before they repay the loan. This can strain their finances and leave the property that backs the debt less protected.
Separately, Actuaries Institute research estimates that 1.61 million Australian households struggled to afford cover in the year to March 2024. It defines that stress as premiums above four weeks of gross household income.
The institute estimates that affected borrowers owed A$57 billion on their home loans. These figures describe exposure to insurance costs; they do not establish that climate change alone caused the stress.
Stress tests describe risks, not forecasts
The Australian Prudential Regulation Authority, or APRA, worked with five major general insurers on a stress test published on March 24, 2026. It tested two scenarios. In both, the share of households without cover in freestanding homes rose from about one in seven to one in four by 2050.
APRA says those scenarios are not predictions. Higher weather losses drove the gap in one scenario. In contrast, rising building costs were the main driver in the other. Apartments and other strata properties were outside that household measure.
APRA says damage without insurance cover could strain borrowers’ loan payments and affect the property backing the debt. Romero Cortes said lenders should review cover and renewal costs on a regular basis, rather than check them just once.
Sources: APRA, Actuaries Institute, UNSW BusinessThink
