The Sydney Morning Herald has this report from Australia. "Sydneysiders are losing their homes at a record rate, forced out by crippling mortgage payments, exorbitant petrol prices and high personal debt. The latest NSW Supreme Court figures show repossessions by financial institutions are approaching an annual total of 5000, more than twice as many as three years ago."

"Sydney real-estate agents have reported a sharp increase in repossession sales after home loan interest rate rises in May and August. 'It's very, very sad,' said PRD Nationwide Liverpool's Ray Dimarco, who has a number of default sales on his books. 'We've had some cases where they've handed the keys over and they're still wiping the kitchen down. They're still proud of their home.'"

"Mr Dimarco said the market had slumped by up to 25 per cent in some pockets of Sydney, which had added to the panic in the market. People who had borrowed heavily to buy a $400,000 property just a few years ago wouldn't sell it now for much more than $300,000."

"At Annandale, a 'mortgagee in possession' house, bought 18 months ago for $750,000 was up for auction. But only a handful of interested parties went looking for a bargain. The Susan Street home passed in at auction without attracting a single bid."

"Before the auction, Century 21 City West principal Matthew Meynell expected the three-bedroom, two-bathroom strata home to sell for about $550,000. Afterwards, a potential buyer offered a mere $330,000."

"It's not the only repossessed home in the popular inner-west. 'There are a couple coming up and we have another in Annandale in a few weeks,' Mr Meynell said. 'I think some people overcapitalised and it has been very easy for people to borrow money.'"

From Lew Sichelman. "The lending business is marshaling its forces on an unprecedented scale to get in front of what could be a flood of foreclosures. With mortgage rates climbing, millions more borrowers with pay-option and interest-only loans face the prospect of larger payments in the coming months. Even those with conventional adjustable-rate mortgages will feel the pinch."

"An estimated $375 billion worth of loans will adjust to higher rates this year and $1 trillion in 2007. Add in higher energy costs, higher homeowners' insurance premiums and higher taxes, and it's easy to see a disaster in the making."