Rates are down, but mortgage defaults keep rising. Why?

We have turned back the clock on interest rates in South Africa. The last time rates were this low was October 2006, yet the number of stressed mortgage bond holders continues to rise.

Auction Alliance, SA’s largest auction house, defines a stressed homeowner as someone who is at least two months in arrears on bond repayments.

According to Alliance Group CEO Rael Levitt, thousands are still struggling to pay their Home Loans. And the rate of defaults is increasing. The group projects that the number of stressed homeowners will reach about 200 000 in the second quarter of 2009.

With rates at a three year low, why are so many people still struggling to pay their mortgages?
Does this mean that they were already under pressure in 2006?

[via: Business Day]