New research from Roy Morgan shows that mortgage stress among Australian home borrowers has increased, despite a decline in loan rates. Roy Morgan's definitions of mortgage stress are based on the ability of home borrowers to meet the repayment guidelines currently provided by the major banks: "At Risk" is based on those paying more than a certain proportion of their household income (15 per cent to 50 per cent depending on income) into their loans based on the appropriate standard variable rate reported by the RBA and the amount the respondent initially borrowed. "Extremely at Risk" is based on those paying more than a certain proportion of their household income (30 per cent to 45 per cent depending on Income) into their home loans based on the standard variable rate set by the RBA on the amount respondents currently owe on their home loan. On this basis, in the three months to July 2016, 17.0 per cent of mortgage holders were 'at risk', but this increased to 17.3 per cent in July 2017. Over the same period the proportion that were 'extremely at risk' also increased, from 12.4 per cent to 12.8 per cent.The main cause of the increase in mortgage stress was the lag over the last year between the median household income of mortgage holders (which only increased by 2.0 per cent) and the increase in the median amount borrowed (up 7.4 per cent) and the median amount outstanding (up 13.1 per cent).This was despite the fact that home loan rates (based on the RBA standard variable rate) over this period actually declined from 5.40 per cent to 5.25 per cent. "It appears from our research that fewer people are taking out home loans and those that do have increased their borrowings, most likely as a result of low interest rates and rising house prices," Norman Morris, Industry Communications Director, Roy Morgan Research said.The concern is clearly that existing mortgage holders who have borrowed in a low interest rate environment are likely to face increased levels of mortgage stress when rates do start to rise. The final impact, however, will be determined by what happens to household incomes, which are currently showing very modest growth, Morris noted.