How Does Falling House Prices Cause People To Default On Mortgage Payments?

When house prices were escalating rapidly, your equity in a house was steadily rising and for those who were ‘flipping’ or buying a home to resell it and reinvest in something bigger, if they couldn’t sell quickly they could always refinance the mortgage, get a bigger loan and use the money to keep paying off the investment.
As housing prices flatten or worse begin to fall, owners who are faced with escalating house payments because of the rising interest rates and variable or indexed mortgages, can no longer refinance for bigger loans because they no longer have the rising equity in the house. Sometimes when they are forced to refinance they face payment increases of 25% or more leading them to default on their mortgages and walk away from their investment.
Hope this helped.