That's up from the report's prediction that by June, 750,000 borrowers would suffer from mortgage stress.

"We had such low interest rates for so long that people had a false sense of security," Fujitsu Consulting managing consulting director Martin North said.

"Even if there were no further rate interest rate rises more people would fall into stress.

"Even if rates drop, the stress won't drop."

Instead of defining mortgage stress as borrowers spending 30 per cent of their after-tax monthly household income on repayments, Fujitsu Consulting asked respondents to fill out a 13-part questionnaire.

It asked consumers if they could meet loan repayments and if they had to sell their property.

The research on 26,000 consumers since 2006 concluded that people who had to adjust their spending habits to pay off a home loan were suffering from mild mortgage stress.

Severe mortgage stress was when borrowers were falling behind in repayments, thinking of selling up or facing default proceedings against them.

The report said that for every 25 basis point interest rate rise, 75,000 struggling borrowers could fall into severe mortgage stress, swelling the down-and-out ranks to 300,000 by June.

Among those would be 45,000 young, growing families and 37,000 suburban borrowers.

By mid-year, the report predicted 750,000 borrowers would suffer from some form of mortgage stress, with 150,000 home buyers cutting back on their spending with every rate rise.

Interest rates were raised in February and March, each time by a quarter of a percentage point, which took the cash rate to a near 12-year high of 7.25 per cent.

Economists expect rates to rise again in 2008 following news this week that annual underlying inflation grew by a 16-year high of 4.25 per cent in the March quarter, which was well above the central bank's two to three per cent target.

Mr North said a growing number of affluent consumers were falling into mortgage stress as they stacked on the credit card debt, without realising that official interest rates over the long term were 10 per cent.

Reserve Bank of Australia governor (RBA) Glenn Stevens told a parliamentary committee earlier this month that the definition of mortgage stress should be changed so it referred to the bottom 40 per cent of income earners who were spending more than 30 per cent of their income on home loan repayments.

"Someone on a very high income who has chosen to have a very large mortgage and still has a lot of money to live on after that could technically be defined as in stress if you just used the 30 per cent rule, so I do not think that is very useful," Mr Stevens said.

But under the RBA chief's definition, an Australian earning an average time earnings wage of $58,000 would not be in mortgage stress if they spent a third of their income on a home loan.

AAP April 24th 2008