More households are predicting debt troubles in the future despite low interest rates.

And wage cuts are largely to be blamed for households feeling the pinch, new findings from the ME’s 10th Biannual Financial Comfort report show.

The findings showed of the majority of households with debt, alarmingly one in ten believe they won’t be able to make minimum repayments in their next year — this is the highest ever level in the report’s five-year history.

Many Australian households with debt believe they won’t be able to make minimum repayments on money owed in the coming months.Source:Supplied

This has raised concerns as mortgage interest rates are at their lowest levels in history — many variable and fixed rate deals are below four per cent.

And when it comes to cash buffers over half of households reported minimal cash savings of less than $10,000 they could access in an emergency, while 30 per cent have less than $1000 in cash savings.

The report’s co-author Jeff Oughton said the findings were collated from 1500 Australian households and highlighted there was increasing concern about the debt burden.

ME Household Financial Comfort report Jeff Oughton said financial pressures on households are rising.Source:Supplied

“We are finding wage cuts across the economy, about 29 per cent of households have had an income cut over the past year ... a lot of people have a big mortgage and they have little cash savings,’’ he said.

“What’s pushing people over the edge is those getting wage cuts, working less hours and the retrenchments that are occurring.”

Single parents are those most likely to be hit hardest with one in five conceding they would be unable to meet their required minimum debt repayments.

The report also found one in ten households who are “paying off or owning a home” are drawing on the equity in their property to pay off debt, while another 10 per cent are doing this simply to make ends meet.

Consumer finance expert Lisa Montgomery said the report’s findings on debt were “concerning” as many households face a worse situation when rates do rise.

Consumer finance expert Lisa Montgomery said people often take on too much debt in a low interest rate environment.Source:Supplied

“It’s not unreasonable when rates are low for people to take on more debt than they need,’’ she said.

“But there’s a greater concern when interest rates start to rise what will that mean to household debt and family’s ability to repay that debt.”

The lowest-ever inflation levels in 16 years were reported last week with just one per cent growth in the year through to June and consequently many economists are forecasting a rate cut when the RBA meet tomorrow. (Tues.)

This would see the cash rate fall to a historic low of 1.5 per cent.

sophie.elsworth@news.com.au