Mortgage stress a reality for more than half of Australia home owners, according to Aussie survey

The research also revealed a considerable number of people had not factored a rate rise into their budget at all.

The results come as home owners prepare for another possible rise in the Reserve Bank of Australia's official cash rate - currently 1.85 per cent - in September.

A survey of 1010 mortgage holders conducted by broker Aussie provided a snapshot of loan stress across the nation.

Mortgage stress is typically described as households that spend more than 30 per cent of gross income on housing costs.

The July poll found 30 per cent of those surveyed expected to go into significant mortgage stress if the cash rate reached 2 per cent, while 42 per cent said they would experience it at 2.5 per cent.

More than half (53 per cent) expected to feel significant mortgage stress at a cash rate of 3 per cent.

Two of the major banks have forecast the RBA cash rate to reach 3.35 per cent, with Westpac expecting it to peak in 2023 and ANZ in 2024.

NAB has predicted a cash rate peak of 2.85 per cent in 2024, while Commonwealth Bank has forecast a more modest 2.6 per cent.

One in five (21 per cent) survey respondents said they did not know the cash rate that would push them into significant mortgage stress.

Meanwhile 65 per cent of mortgages holders have concerns they may default on their loan repayments due to cash rate rises, with almost a third (30 per cent) stating they were definitely or highly concerned.

Mortgage holders under 50 were more likely than those aged above 50 to feel concerned at some level, the survey found.

For Canberra home owner Satyam Dalal, interest rate rises are something he had planned for since purchasing his house about 10 years ago.

"This is kind of a cycle where things that go up, have to go down and things that go down, they have to go up," he said.

"When interest rates were [lower], we were trying to manage the payments and pay a bit extra every month. So we don't feel that pinch because we know that we are going to pay this amount every month."

A separate survey conducted by online financial broker Savvy revealed 26 per cent of 1005 respondents considered mortgage repayments a significant cost of living concern.

More than half (53 per cent) said they would try to cut down on other expenditure to prioritise mortgage repayments.

Mortgage stress isn't something Mr Dalal expects to feel in the near future; other cost of living pressures - particularly the price of fuel - are more of a concern.

"We all go to work and we all have different things to do so it does add up to your normal expenses. So obviously that does affect the family," he said.

"But that all depends on how you try and manage that cost."

Karen Sorrenti, state broking manager, NSW and ACT at Aussie, said the research revealed worrying levels of low financial literacy with almost three in 10 respondents stating they did not factor a cash rate rise into their home loan budget.

"With increased cost of living pressures, there's no doubt this is a stressful time for many Australians, particularly mortgage holders," she said.

"However, a staggering number of mortgage holders have not taken action or investigated their alternative options which is one key factor in addressing the mental and emotional strain."

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Credit Star Co Home Loans director Harbir Singh said the ACT's high average income had helped to insulate some home owners from the recent rate rises.

The 2021 census found the ACT had the highest median personal income at $1203 per week.

"Fortunately, people in Canberra are [less] impacted ... but it certainly has impacted people's plans moving forward," Mr Singh said.

Mr Singh said many of his clients had been looking to change lenders and secure a better interest rate to reduce their monthly repayments.

"It all starts flowing from the initial conversation because many times clients are not even aware what options they have," he said.

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