Higher interest rates are tipped to force more than a million Australian households into a state of mortgage stress by the end of the year, a new report says.
The report by Wizard Home Loans and Fujitsu Consulting suggests there are now about 837,000 households experiencing some form of mortgage stress, up from 784,000 in May.
Almost half of those households are considered to be in severe mortgage stress - that is, struggling to manage their level of debt and meet home loan repayments - the report says.
But with ongoing fallout from the global credit crunch tipped to see commercial banks raise interest rates again, regardless of any move on official rates, Fujitsu spokesman Martin North said the situation was expected to become much worse.
"... our report predicts major lenders to continue out-of-cycle rises of up to 0.3 per cent before December," Mr North said.
The report says 15 per cent of all borrowing households, including owner-occupiers and property investors, would be in mortgage stress by the end of the year.
"... the sad fact is that come Christmas time, we estimate that one million Australians will suffer mortgage stress," Wizard Home Loans chairman Mark Bouris said.
The warning comes after the federal government launched a program aimed at providing relief for people struggling with soaring rental costs.
The government launched its National Rental Affordability Scheme which aims to increase the supply of affordable rental dwellings by 50,000, and possibly 100,000 by 2012.
The properties will be rented out at 20 per cent below market value.
The scheme will offer incentives to developers at a cost of $623 million over four years.
