The Reserve Bank of Australia raised its official cash rate to 4.6% last week, the highest level in 15 years, with financial markets pricing in at least one additional hike. Against that backdrop, the preliminary auction clearance rate over the weekend fell sharply to 48.2%, the second-lowest reading so far this year. Home values across the five major capital cities are down 6.6% from their early-April peak, leaving the market 2 percentage points short of the sharpest price correction in more than 40 years.

Roy Morgan’s latest survey found 32.3% of Australian mortgage households were under mortgage stress in August, including 22.7% in “extreme” stress, the highest level since the 2008 global financial crisis. The Reserve Bank of Australia lifted the cash rate by 25 basis points to 4.60% on Tuesday, and markets have priced in at least one and possibly two further increases. With additional tightening, mortgage rates could approach 7.0%. Roy Morgan estimates that if the cash rate rises to 4.85% in November, the share of households at risk would climb to 33.9%.