More Australians fell into mortgage stress in October, according to the latest poll by Digital Finance Analytics.
The results of the survey revealed that a further 70,000 household fell into stress, pushing the total to 1.7m, or 32.2% of the population.
The results came off the back of a moderation in stress levels over the previous month, which was attributed to the impact of rate cuts and tax refunds, said DFA principal Martin North.
"Household debt is at record highs, and while costs are still rising, incomes are not in real terms. There was a spate of refinancing which helped some households, but the bulk of these were not in stress in the first place. The rejection rates for those in mortgage stress are and remain consistently higher," he said.
North said defaults are expected to rise in some parts of the country. In New South Wales and Victoria, for instance, the weakening of economic conditions could potentially worsen stress levels. On the other hand, Canberra is more guarded compared to other states due to higher public-sector wages.
Recent figures, however, show that the highest proportion of households in stress was in Tasmania, where 39% of mortgage borrowers are struggling to meet repayments. Northern Territory followed with 36.7%.
However, the total number of stressed households in Tasmania and Northern Territory was lower than those in New South Wales, where nearly 300,000 households were in difficulty. This equates to 28.3% of the households in the state.
In Victoria and Western Australia, around three in five households were in mortgage stress.
Across household segments, more than half of young growing families were in stress, accounting for over 166,000 households. Almost half of those living in the urban region and fringe areas were also reported to be in stress.
"Rural households are under pressure thanks also to the drought, with 25.6% in mortgage stress, or 78,500 households, and even the most affluent segment – exclusive professionals – are 24% in stress with 54,600 households. In other words, mortgage stress is appearing in every sector of society," North said.