Digital Finance Analytics (DFA) found to the end of May, the percentage of households in mortgage stress reached 37.5%, equal to 1.42 million households.
In addition, almost 100,000 households could default on their loan when the JobKeeper scheme comes to an end in September.
DFA founder Martin North said households are considered “stressed” when their income doesn’t cover their ongoing costs.
"The mix of households in stress is changing, as a larger number of affluent households are finding their finances are under pressure," Dr North said.
"Indeed, whilst many battlers are under pressure, they are used to it, but more affluent households are experiencing financial pressures as incomes have dropped."
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He said while JobKeeper had been a saving grace for many, other income streams hadn't been supplemented, causing stress.
"They are also exposed to property investments which are not performing, higher vacancy rates and the like; and in some cases, reduced hours too,"
"Typically, it can take two to three years for stressed households to either sell up on their own volition, or get foreclosed, so we expect higher default ahead given unemployment will be under 7% by the end of next year."
Dr North said tenants were also feeling the pinch, with rental stress rising and consequently putting pressure on investors.
"Around 12% of investors are indicating they may consider selling in the next year, and around half have been using Airbnb to let their places, which is now not possible."
He added younger families were most affected by mortgage stress, with the rise in stress not wholly confined to metropolitan areas.
"The highest proportions are in Tasmania. Households with low incomes and strong rises in prices," he said.
"And young growing families, including first-time buyers are most exposed."
CommBank and Westpac recently announced they would be offering temporary switches to interest-only repayments for borrowers on principal and interest payments, as part of their COVID-19 financial hardship support measures.
Dr North said he was worried about borrowers who took up such offers, as they would suffer in the long run.
"I am not sure switching to interest-only loans is a smart move as capital still has to be repaid at some point," he said.
Household debt and high unemployment Australia's 'Achilles heel'
AMP Capital chief economist Shane Oliver said record-low mortgage rates were keeping the property market functioning for now.
"This is keeping mortgage debt interest costs as a share of household income well below historic highs even though the ratio of household debt to income is at a record high of around 200%, Mr Oliver said.
"Low mortgage costs also make the funding costs for an investment property very low."
Mr Oliver said JobKeeper was the only thing stopping a complete collapse in the property market.
"Government support measures have provided a huge boost to household income, supported businesses, supported employment for around 3.5 million workers, prevented a confidence zapping surge in measured unemployment and with bank mortgage payment holidays are preventing a sharp rise in mortgage delinquencies and hence forced sales," he said.
But Mr Oliver said the combination of high unemployment and high household debt was Australia's "Achilles heel", and turning JobKeeper and other stimulus measures off could be disastrous.
"But once the support measures end later this year, measured unemployment will likely rise to around 8% and take a long time to fall back to the pre coronavirus levels around 5.2%," he said.
"This in turn is likely to lead to some increase in mortgage defaults as bank payment holidays (for around 440,000 mortgages) end, boosting forced sales and act as a drag on property demand, albeit it’s unlikely to be anywhere near what would have occurred in the absence of support measures through the shutdown."
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