More than one million Aussie homeowners will struggle with mortgage stress if interest rates were to rise just three percentage points, according to exclusive analysis performed for Australian Financial Review Weekend.

Close to one in three households in Victoria, Tasmania, and Western Australia will experience mortgage stress, ranging from mild to severe in the event of just three rises of 25 basis points, according to Digital Finance Analytics (DFA). A rise of 300 basis points would lead to more severe consequences.

Overall, 21.78% of households are in some degree of mortgage stress, according to Martin North, principal of the DFA. Of this percentage, 19.08% suffer from “mild mortgage stress,” meaning households manage to meet repayments by cutting back on other expenditure, putting more on credit cards, and seeking to refinance or restructure to reduce monthly payments. Meanwhile, 2.7% are said to be suffering from “severe mortgage stress,” meaning households are likely to be missing repayments, in default, or looking to sell.

The economy itself is skating on thin ice following warnings from the OECD that Australia has a one in five chance of entering recession. The nation’s $6.5trn housing market is also in danger of crashing.

Skyrocketing prices in Melbourne and Sydney have added to the risks faced by the economy, as rising levels of household debt render homeowners and property developers vulnerable to unexpected moves in interest rates.

According to the DFA’s mortgage stress models, which have incorporated data to 1st March 2017, household budgets remain under pressure, thanks to stagnant income and rising living costs.

A lift in interest rates, to put it quite frankly, would drive many households over the edge.