At least 113,000 Australian households are so severely cash-strapped that they may be forced to sell, based on the Fujitsu Consulting Mortgage Stressometer.
It bleakly predicts that around 600,000 homes - eight per cent of the market - are heading for a mortgage crisis by the end of the year.
In households ranging from traditional battlers to middle Australia, consumers under mild financial stress are maxing out their credit cards to keep afloat, according to Fujitsu Australia and New Zealand managing consulting director Martin North.
"If we assume prime lending will be repriced by 0.15 per cent and the most risky lending by 2.0 per cent by the end of the year, the number of Australian households under severe stress will climb from today's 70,000 to 113,000 households," North said.
"Those under mild stress are likely to rise from 171,000 today to 488,000 households within a few months. We have reached a tipping point."
JPMorgan's banking analyst Brian Johnson said housing affordability has worsened as house price appreciation has outstripped growth in disposable income.
"Additionally, average credit card outstandings, fuelled by the introduction of zero balance transfer products and ever increasing customer limits, have grown from the equivalent to one month's disposable income in 1997 to the equivalent to three months' disposable income in 2007," Johnson said.
The Australian Mortgage Industry Report (September 2007) is a joint effort between JPMorgan and Fujitsu based on Fujitsu mortgage market and yield improvement modelling.
