Cost of living pressures have pushed levels of mortgage stress to an all-time high, a report says.

The September edition of the Genworth Streets Ahead report, released on Wednesday, found 25 per cent of borrowers had struggled to meet a mortgage repayment in the past year.

The result was up four percentage points from the previous survey undertaken in March.

“Current economic uncertainty and increases in living costs have seen stress rise to unprecedented levels in the six months to September 2011,” the report said.

“No previous survey has seen mortgage stress levels hit 25 per cent, not even during the depths of the GFC (global financial crisis).”

Levels of mortgage stress have been on the rise since calendar 2010 when interest rates began rising, the figures showed.

“The main drag on homebuyer confidence in this period is the increasing concern among homebuyers about their ability to repay their mortgage in the future,” the report said.

“This, in turn, is likely underpinned by media attention on domestic and global economic conditions affecting consumer sentiment, despite many strong domestic economic indicators for property markets.”

Mortgage stress was the primary reason for the Genworth homebuyer confidence index falling 1.9 index points to 94.4 points in September. This represented a two per cent decline from the previous survey in March this year, the report said.

While the index has fallen for the past three surveys, it was still at levels above those during the 2008 global financial crisis.

The report found 36 per cent of borrowers surveyed believed now was the right time to buy a home.

Home buyer confidence in Queensland improved 4.2 per cent as the state recovered from natural disasters, amid improved property prices.

The report found first home buyers were optimistic about the prospects about buying a home, but existing debt was a hurdle for some.

Younger Australians were cutting back spending on luxury goods, clothes and reducing spending on groceries and other necessities to save for a deposit, the report said.

“What this edition of Streets Ahead tells us is that, despite such challenges as natural disasters and the rising cost of living, the Australian dream of home ownership prevails,” Genworth chief executive Ellie Comerford said in the report.

The report said the findings were based on a survey about 14,000 adults.