Australia's household wealth is at record levels — and for a growing number of borrowers in their 40s through to early 60s, it counts for very little when the bills arrive.
National household wealth rose 2.5% in the December quarter, and the average residential dwelling reached $1,074,700 in the same period. Yet the equity sitting inside those homes remains largely out of reach.
That is the central argument of Scott Collison (pictured), co-founder and co-CEO of Midkey, who contends that the traditional financial arc — earn steadily, reduce debt, retire unencumbered — is no longer a workable template for modern households.
"A lot of people are not feeling as rich as their balance sheet suggests," Collison wrote.
The reason, he argues, is structural: home equity is the nation's dominant asset class, valued at approximately $12.3 trillion, but serviceability assessments are anchored to income rather than accumulated wealth, leaving households unable to draw on what they own to manage what they owe.
That inaccessible equity, Collison argues, sits on top of a debt load that has grown heavier. Australia entered the current rate cycle carrying one of the highest household debt-to-income ratios in the developed world, at around 180% — manageable in a low-rate environment, far less so as mortgage costs have risen sharply since April 2022. The RBA has now raised the cash rate three times in 2026 alone, lifting it to 4.35% in May.
Beyond the rate environment, Collison points to the fact that people are buying first homes and upsizing later in life, pushing mortgage terms out further and leaving borrowers in their 50s and early 60s still carrying significant housing debt — a clear departure from previous generations.
Many in this cohort are also navigating competing financial demands simultaneously: private school fees rose an average of 7% in 2026, adult children need help entering the property market, and ageing parents increasingly require financial support.
For those seeking to upsize or build, construction material prices rose 2.5% over the year to March 2026, according to Master Builders Australia, adding another layer of strain to what Collison describes as a fundamental reshaping of how this life stage is experienced financially — "what was once considered a period of financial consolidation for mid-life Australians."
Collison's sharpest observation is directed at the financial system itself. Household behaviour, he writes, has already begun to shift — borrowers are taking a more active approach to debt structures, unlocking liquidity more deliberately, and prioritising financial flexibility over singular debt reduction. The credit system has been slower to follow.
"Traditional lending models remain heavily anchored to income-based serviceability metrics that do not fully reflect accumulated asset positions," he wrote.
Meanwhile, mainstream financial advice continues to assume a relatively linear path to a debt-free retirement — an assumption Collison argues is increasingly at odds with the reality facing this borrower cohort.
The result, in his view, is a widening gap between how these households experience financial pressure and how lenders assess their capacity to borrow.
"That gap becomes more pronounced as more borrowers fall outside conventional definitions of credit serviceability, despite holding significant underlying wealth," Collison said.
For brokers working with clients in this life stage, that gap is precisely where expertise adds value — identifying options for borrowers who appear constrained on paper but hold substantial assets, and helping them navigate a lending environment that has, if anything, tightened further around the very borrowers who need the most flexibility.
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