One issue is that many mortgages come with a 'teaser rate' -- an introductory rate that lasts for some amount of time, like a year. So say you got a prime+2 mortgage (when prime was 5%) with a 2% rate increase cap/year and a 3.5% teaser for a year. Say you borrowed $200,000. Your monthly payment at 3.5% is $898/mo. After a year, it goes up to $1,135/mo (ignoring your principal decrease). After another year it does the max 2% rise to to 7.5%: $1398/mo. Prime is now 7.5%, so your prime+2 is hitting 9.5% or $1,681/mo ... that's twice what it was three years ago, even though you've only seen a 3% rise in rates.
The big deal is that people aren't used to having their housing cost double in three years.
/jordan