Stressed home loan borrowers who stretched their budget to buy a property before the rate rises began in 2022 are "dangerously close to breaking point", according to new research.
And if rates rise again tomorrow, they could be forced to fork out as much as 45 per cent of their pre-tax income to loan repayments, leaving little left over for insurance, bills and other living costs.
Canstar's finance expert Steve Mickenbecker said even one cash rate cut, with the first forecast by two of the big four banks to take place as soon as November, won't be enough to "steer stressed borrowers clear of danger".
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"Borrowers who maxed out their borrowing to the highest affordable level just before the Reserve Bank started lifting the cash rate will now be in a seriously stressed position," said Mickenbecker.
"Lenders' loan assessments allow for an interest rate three per cent higher than the actual lending rate to allow for higher future interest rates.
"That's usually conservative but when rates rise by 4.25 per cent in 18 months, way more than the lift in incomes, stressed borrowers are in uncharted treacherous waters.
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"When a couple both on average incomes borrowed to the hilt in April 2022, they would already have seen around 31.59 per cent of their before-tax income going towards their loan repayment, which is just over the 30 per cent rule-of-thumb threshold for stress.
"With a combined income of $184,000 there is room for a bit more, but with today's loan repayments tipping 44 per cent of their pre-tax income, they are in clear-cut stress.
"With the big banks predicting no rate cuts before November at the earliest and most pessimistically May 2025, many borrowers will be living in stress for quite some time.
"Even then, one rate cut will only move many mortgage holders from dire stress to deep stress."
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Mickenbecker advised borrowers to speak to their lender if they were struggling.
Monthly home loan repayments have risen since the May 2022 cash rate rise by an estimated $1,562 per month on a $600,000 loan over 30 years taking repayments up to $4,085, Canstar said.
With the big four banks still forecasting the next rate move being a rate cut, a reduction of 0.25 per cent could cut current repayments on a $600,000 loan by $101 to $3,984 per month.
On the flipside, an unexpected 0.25 per cent rate rise will add another $102 and see monthly repayments on a $600,000 loan reach $4,187.
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