Consumption and Real Estate
What caused the home mortgage rates to sky rocket, causing people being unable to pay their monthly mortgages?
Question : What caused the home mortgage rates to sky rocket, causing people being unable to pay their monthly mortgages?
The recession was caused by people being unable to pay back their home mortgages because the mortgage rates were too high?
Banks were not getting their money back from home owners, causing a credit crunch, thus they were unable to lend money to big businesses.
Big businesses then had to cut back on expenses and began to lay people off the the thousands.
So what caused the mortgage rates to go up so high that started this financial mess in the first place?
mortgage
Best answer:
Answer by carmenlafond
ARM’s -Adjustable Rate Mortgage.
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#2 written by Todd S 1 year ago
High rates weren’t the issue…rates were actually very low, which allowed millions to refinance and pull out cash from their homes, while others bought homes at super low interest rates with next to nothing down. The high home prices led to extreme affordability measures like option arms and 100% financing.
Rates are currently at all time lows thanks to government intervention, but they’ll eventually climb again as the economy improves.
http://www.thetruthaboutmortgage.com/what-causes-mortgage-interest-rates-to-move/
There’s a whole lot more to it, and you’re missing the mark pretty bad. You’ll probably fair quite badly on your book report if you don’t do some more research.
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#4 written by Old Guy 1 year ago
A simplified answer is that during the Clinton admin, there was a Dem push for making banks loan money to underqualified minorities, called the Community Development Act. Barney Frank and Chuck Shumer, both dems pushed Fannie Mae and Fannie Mac to underwrite these types of extremely risky loans.
Eventually, the financially underqualified loans resulted in the forseeable; you shouldn’t loan money to people who you know thru history will not be willing or able to repay it..and the bubble burst. -
#6 written by Greg 1 year ago
Generally, mortgage rates didn’t skyrocket.
Some sub-prime and alt-A mortgages reset after two years allowing the lender to raise rates however. But… rates are lower now than ever thanks to the Government using FHA, Fannie and Freddie to finance over 90% of all home loans and the fact that we are in a liquidity trap.
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#7 written by Philip McCrevice 1 year ago
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Democrats overstepping their entitlements.
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Adjustable rate loans that are no longer at their teaser rates. Lending guidelines and lie to me loans that qualified hotel room attendants that earn 45k a year for $ 750,000 mortgages . And real estate prices that continually rose.
hope it helps