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When rates rise steeply, one likely result is an increase in the number of mortgagors who cannot afford to make their monthly payments under the mortgage agreement and who fall into arrears. If this happens, in time, unless the agreement is renegotiated, the mortgagee may choose to exercise its right to take possession of the property (repossession), with a view to selling it and recovering all monies outstanding under the mortgage agreement; any amount the sale raises above that which is owed to the mortgagee belongs to the mortgagor. However, a high number of repossession actions is one factor that contributes to a slump in the property market, which may mean that sale price will not even cover the outstanding amount...
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