Acute pain is being experienced by Australian homeowners Prime Minister Kevin Rudd told reporters. Rising interest rates and the credit crisis are putting more pressure on homeowners.

The JP Morgan and Fujitsu Consulting report published in Fairfax Publications predicts 750,000 homeowners will suffer mortgage stress this year, with more than 35 per cent of their income going on loan repayments and goes on to suggest that 300,000 out of the 750,000 could potentially default on their home loans and risk having their homes repossessed.

Rates will go up by another half to one per cent over the year, so more and more people who are in an already fragile position are going to be hard hit.

Martin North, a spokesman for Fujitsu Consulting, claims that working class families are not the hardest-hit target in the housing crisis as it is also beginning to creep into the higher earning bracket.

Spokesman for JP Morgan Brian Johnson says that the situation is being made worse with people forced to rely on credit cards for basic expenses. The average Australian household spends over three months of its disposable income on credit card debt. In addition to this Australia runs a system of negative credit reports meaning that the only picture a credit bureau has is one of people defaulting on their credit card. This means that there is no captured data of the actual total dollar value of debt.

Saul Eslake ANZ chief economist suggests that the problem is made up by a number of factors but when you compare the percentage of people in trouble on an international scale it is still only quite small. He added that there are more than 5 million homeowners in Australia and although the percentage of those who are experiencing difficulties is rising in comparison to the United States the proportion still remains low.

NSW Premier Morris Iemma said that the rising cost of living is having a devastating impact on hardworking families who face financial stress as they struggle to meet extra mortgage repayments.

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