The RBA cash rate that would plunge 'majority' into mortgage stress

More than half of all households will slide into "significant mortgage stress" if the Reserve Bank cash rate hits 3 per cent, as is expected, according to new research.

Almost one in five borrowers are already feeling the pinch of significant mortgage stress, a survey from home loan provider Aussie found, following four-straight RBA rate rises.

Economists at Westpac and ANZ are predicting the official rate to peak at 3.35 per cent, up from the current 1.85 per cent.

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If that eventuates, it would mean interest rates will almost double from where they are right now.

The research revealed a significant number of Australian mortgage holders are braced for mortgage anxiety.

Almost three in ten borrowers surveyed said they did not consider that the cash rate would increase at all when budgeting for a home loan, despite having to account for it in their home loan assessments.

And four in ten only budgeted for the impact of a cash rate of 3 per cent or under.

While economists at Westpac and ANZ were forecasting the cash rate to move above 3 per cent, analysts at Commonwealth Bank and NAB share a more optimistic outlook, anticipating a level between 2.5 to 3 per cent.

"The real bogey for mortgage stress is when people start losing their jobs," property economist Dr Andrew Wilson told 9news.com.au.

"That's what we've got to watch for.

"But ... we really don't have that likelihood in the foreseeable future."

Australia's unemployment rate of 3.4 per cent is at its lowest level in nearly half a century.

"It's been a year of correction in our capital city housing market," Wilson said, but added the turbulence was "no surprise" after years of booming property prices.

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While some were predicting house prices in Sydney and Melbourne to drop up to 15 per cent, Wilson said he was not convinced.

"There are a number of factors that may mean that this correction phase will be a shallower one than many are expecting," he said.

The market in Australia's two most populated cities could bottom out by the end of the year, he said.

"There's no doubt that this is the hangover after the party."

The real issue now, he said, was confidence.

"We're generally an undersupplied market in all our capital cities.

"There's not enough houses to match demand, and all you have to do is look at the rental market to see that."

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The first rate increases in years, and the prospect of more, had sidelined buyers and sellers, he said.

"They're just waiting to see how it all pans out."

The next RBA decision is scheduled for September 6.