It's not the same as past generations. RE prices were much lower relative to wages when rates were higherPeople are freaking out because their mortgage interest rate might rise to 4%, and there might be 5% price inflation.
Our first mortgage interest was 21% and over 20 years later our mortgage interest rate was 7.99%. Inflation was higher than it is today but we survived.
People who are overextended will deal with it as past generations have. You tighten the budget, work more hours, or sell stuff to lower your debt.
In worse case financial scenarios, you declare bankruptcy and start over with a life lesson under your belt and a better plan.
Higher interest rates would be a whole new world for a lot of people.
8% mortgage, cheaper RE and reasonable saving yields was a much healthier economy. Inflation raised the value of assets and benefits those who already own. Of course you survived @sags all you had to do was buy a house and let its value increase. How would you like to start now the RE is so high?
Low mortgage rates allowed people to borrow more and bid up RE prices. Raising rates back up is not really possible without crushing the young people who just bought in. Saying people just need to learn a life lesson and a better plan is very narrow sighted and ignorant of reality people face today.
Worst case scenario is far worse than some personal bankruptcies. CMHC and banks would suffer. Economy would suffer