I think the core issue is that most people don't think of it as logically as you do. As you stated the right thing to do is to look at interest rates and not o

I think the core issue is that most people don't think of it as logically as you do. As you stated the right thing to do is to look at interest rates and not overexpose oneself to the effects of inevitable rate changes. How most people think about it: I can afford the monthly payment and it's cheaper than my rent. Let's do this. Fortunately banking laws in Australia prevent banks from granting loans to people that they can just barely afford. However despite this most people still don't have any savings or disposable income (When compared to similar "rich" economies, Australia has one of the lowest rates of personal savings in the world.) The result is that a lot of people will have to cut back and find their lifestyle significantly changed in order to keep their homes.