By the end of the year it is estimated that one in six households will be in mortgage stress. This would double the current levels.
This equates to 1.2 million households expected to be in danger of missing mortgage repayments or losing the home in a forced sale.
The forecast comes from Fujitsu Consulting, which measures financial stress through its monthly Mortgage Stress-O-Meter survey. Fujitsu managing director Martin North says rising unemployment is a real concern for many.
"If unemployment reaches 7.5 per cent by December 2009, this would translate to over 1.2 million households experiencing some degree of stress, of which nearly 400,000 would be close to the edge," Mr North said yesterday.
"Unfortunately, the stimulus packages will not stop more households from slipping into stress later in the year, as unemployment continues to bite."
The definition of mortgage stress is difficulty in meeting repayments.
The survey uses two classifications: mild stress, when households have not yet fallen behind in repayments but have been forced to refinance or borrow more on loans or cards to pay their bills; and severe stress, when households are already behind in repayments and are either trying to sell their home or being forced to sell.
Despite the gloomy forecast, the survey found an improvement in household finances during April with a 2.8 per cent drop in the homes in mortgage stress, to 568,000, compared with March.
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