Easy money was not a localized phenomenon, and credit tightening won't be either IMO, although it may take time to spread from one jurisdiction to another. I would argue that the US in the early stages of a credit crunch, and that the same should happen here within a year (at a guess). Just as irrational exuberance was an over-reaction to the upside, it's converse will be an over-reaction to the downside, meaning very tight money and deflation.

I wouldn't carry a mortgage, even a low fixed-rate one, unless it represented only a very small percentage of the value of the home. Deflation magnifies the value of debt, making it a far greater burden at a time when the price of the asset would be falling and the ability to ensure the means to make payments would become increasingly doubtful. Real interest rates (the nominal rate minus inflation) are very high during deflation, even if the nominal rate is low (ie nominal rate minus negative inflation). In addition, the real estate market can go illiquid very quickly, which can make it very difficut to extract oneself later if it turns out to be necessary.