Here in Australia, the regulator requires banks to assess your ability to make repayments at an interest rate three percentage points higher than the actual rate. A few years ago it was a floor of 7% rather than a buffer, and they'll probably go back to something like a 2% buffer and a 7% floor (rates increased by more than 3 percentage points in recent times, so looks like a three percent buffer alone isn't enough).

But yeah, mostly what happens if rates go up is that you begrudgingly pay it, because most in that situation can afford it (those who have changed circumstances may not be able to, but most can).

Edit: also, the fact that mortgage holders are more sensitive to rate increases means (it is thought that) the central bank doesn't need to change rates by as much to get the same effect. If there would be widespread mortgage defaults given a certain sized rate increase, then that probably means the central bank can stop short of an increase that large.

So the problem is sort of self-limiting. Rate hikes are designed to induce financial strain, but too much isn't desirable, so central banks don't hike too much on purpose (they sometimes do by accident).