As the housing slump continues, the mortgage stress leading to default on Australia’s home loans will only get worse.

Digital Finance Analytics’ latest survey has found that more than 1 million Australian households were suffering from mortgage stress in March. There were 28,000 severe stress cases.

Martin North, principal of DFA stated that households are considered stressed when their net earnings don’t cover ongoing expenses.

North said that although some households have other assets, and others have saved ahead, people under mild stress are limited in their ability to manage their cash flow. People with severe stress can’t afford to make payments from their income.

The study also showed that almost 667,000 households could be insolvent on their 30-day loan for their home within the next 12 months. This is an increase of 800 households that were expected to default the month before.

North stated that “despite the assurances that household finances are in order, the forces keep building.” North stated that, while we continue to see an increase in mortgages than income, costs remain stable and incomes are steady.

Moody’s also conducted an independent study that found 1.58% of Australian mortgages in arrears more than 30 days. This is an increase of 1.29% from November 2017. All states experienced an increase in 30-day arrears, with the exception of Queensland. However, the highest rates were reported in Western Australia (2.89%) or Northern Territory (2.28%).

“Declining property prices caused an increase in mortgage loans.” Alena Chen (Moody’s senior vice president analyst) stated that delinquencies can be caused by declining house prices. This is because it makes it harder for borrowers with outstanding mortgage debts to sell their homes quickly to pay off their obligations.

Adrian Pisarski (Director, National Shelter) said in an ABC News Report, that these numbers could indicate that many Australians have reached rock bottom.

“We believe that there is a housing crisis at an alarming time. This is the worst we have ever seen. We know that homelessness is on the rise, and that renting has become very affordable. He stated that people struggle to find sufficient income to cover their housing expenses across a broad range of income levels.

Westpac spokesmen stated that the number of households in 30-day arrears is not a reliable indicator of economic risks.

Unfortunate events like the North Queensland floods can cause people to miss payments or cancel their mortgage. To measure the strength and performance of mortgages, mainstream banking analysts and banks use 90-day arrears.

North said that the 30-day default rate for mortgages is an important indicator because it has an effect on household cash flow.

He said that he was frustrated by the fact that not all banks are aware of the cash flow pressures household currently face.

Pisarski stated, “Policymakers must be aware of the growing risks associated with defaults on mortgages” and should avoid any negative consequences.

“So, we have to be aware that if we look ahead, there will be more people in this predicament, who will take out credit and then not get it out. We need to foreclose them. It was a worrying trend, he said.