The Obama administration has enacted legislation aimed at helping individuals who are having difficulty making their monthly mortgage payments because of a decline in their incomes or a rise in the interest rate on their mortgage.

But if the rate rises to 8 , mortgage interest payments rise to 24 , which, together with amortization, taxes, other debts, and necessary expenditures, may claim too much of the family budget.

If one borrows the equivalent of three years' income to buy a house, a mortgage rate of 6 means that 18 of one's income goes to interest payments, which may be tolerable.

The difference in payments is called interest.

Now reality has hit newspapers report cases of borrowers whose mortgage payments exceed their entire income.

The greatest crisis facing many Americans is their increasing inability to meet their monthly mortgage payments.

And when the second group discovers that interest rates don t always stay low, many of them will be unable to meet their higher mortgage payments and will likewise try to dump their properties.

Moreover, the Greek government s interest payments are exceptionally low.

High home prices are already putting great stress on many families, which are struggling to make their mortgage payments.

Since price declines would bring with them wage declines, the ratio of monthly mortgage payments to wage income would rise.

Mortgage interest rates fell below 5 in March and April, but have risen significantly since then.

But even if the intellectual objection to extra revenue can be overcome in this way, the practical political problem is that every large tax expenditure the home mortgage interest deduction, the exclusion of employer payments for health insurance, etc. has its fervent defenders.

If a homeowner stops making mortgage payments, the creditor can take the property but cannot take other assets or a fraction of wages.

Because most people s incomes are stagnant and being eroded as their mortgage payments rise, consumption is bound to fall, yielding lower growth and employment.

Others found that as interest rates rose, they simply could not make their payments.

One place to start is the tax deduction for interest payments on home mortgages.

If that happens, a homeowner with a mortgage would see the real value of his debt rise by 10 . Since price declines would bring with them wage declines, the ratio of monthly mortgage payments to wage income would rise.

Official bankruptcy, a regular occurrence, required prolonging maturities on state debt and reducing interest payments.

In the US, for example, no politician is anxious to say that home mortgage deductions should be eliminated, or that dividend payments should be tax free.

Ex gratia payments are approved by the Controller up to an amount not exceeding 5,000, when such payments are considered desirable in the interest of the organization.

Back then, financial market participants had to devise fantastic schemes and contortions to disguise interest payments.

Further haircuts on private claims would also be needed, starting with a moratorium on interest payments.

Many homeowners who can afford to make their mortgage payments will choose to default, move to rental housing, and wait to purchase until house prices have declined further.

But lower short term interest rates have led to higher medium term interest rates, which are more relevant for the mortgage market, perhaps because of increasing worries about inflationary pressures.

After all, managing for the short run encouraged mortgage lenders to offer artificially low teaser interest rates to lure potential homeowners.

To be sure, the US has long provided subsidies to owner occupied housing mostly through the tax deduction for mortgage interest.

In Mexico, all mortgages carry fixed interest rates, unlike the infamous exploding ARMs that left US homeowners ruing their choice of adjustable rate mortgages when interest rates rose. Mexican mortgages are indexed to inflation, but the state mortgage agency links that index to the minimum wage and makes up the difference if mortgage interest adjustments for inflation outpace wage growth.

Fixed mortgages, with interest rates at 6 , were replaced with variable rate mortgages, whose interest payments were tied to the lower short term T bill rates.

Interest payments, which consume more than 10 of Germany s federal budget, will grow along with the mounting debt burden and even faster if interest rates rise.

That translates into an additional 16billion per year in interest payments on Greece s current debt of 273 billion.

As Bernanke pointed out, 45 of US farms were behind on mortgage payments in 1933, and in 1934, default rates on home mortgages exceeded 38 in half of US cities.

This is exacerbated by the fact that borrowers can deduct only nominal interest payments when calculating their taxable income.

Their cash balances are extremely high, interest payments on debt are low, and principal obligations have been termed out.

And the bond markets will be much more nervous, meaning higher interest payments, which will widen the deficit further.

When interest rates go up, these payments will (when the rate is variable) also go up, possibly becoming unsustainable.

The government effectively pays 50 of the mortgage interest and real estate taxes for upper income Americans, yet does nothing for the poor.

An interest rate rise might take the heat out of the mortgage market, but it will also chill the rest of the economy.

More specifically, the rising unemployment rate, along with the large number of employees on involuntary part time work, has increased the number of people who cannot afford their monthly mortgage payments.

Some mortgages even had negative amortization payments did not cover the interest due, so every month the debt grew more.

The USD 3,675,000 amount for payment of relief was re allocated between actual payments and interest on the amounts paid.

Tools include seed funding, training, consultation services, interest free proposal development loans and more flexible mortgage loan insurance to facilitate the financing of affordable housing.

With a smaller debt burden and interest payments, Egypt s fiscal position would improve significantly, and threats to economic growth would recede.

The proposed solution a commission to recommend a path to balance the primary deficit (the deficit excluding interest payments) in 2015.

For individuals with high monthly mortgage payments relative to their disposable income, the US government will share with the creditor bank the cost of reducing the monthly payment to 31 of disposable income.

Because the inflation rate is also about 2 , this implies a negative real interest rate, which is confirmed by the interest rate of 0.6 on ten year Treasury Inflation Protected Securities (TIPS), which adjust interest and principal payments for inflation.