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Well I started to hear ads for equity loans, I just got a mailer for 100% financing no money down loan and hocus pocus financing. One guy I know got a bridge loan to get his house.
What i am noticing is like before, pricing (housing) has gotten out of reach of most consumers so house sales have slowed AND so have price increases. Right now we're reaching a ceiling. So banks are trying desperately to get loans out and they must PS3 through that ceiling. Friday on my way home I got a call from a lender I worked with years ago and they wanted yo refi my house because rates have dropped. Holy ****. I have a 3.6% loan. How much lower have rates dropped. The lady was literally trying everything to get something. She kept asking if I needed cash out equity. In 25 years I have never cashed out equity on any property why would I start now? But she kept asking if I needed cash out because my value increased. I need cash out like I need a bullet hole in my head. I just bought two months ago. There is absolutely no reason for me to go through a refi. I actually told her I rather take the money they want for the refi and pay to my principal. She didn't like me very much.
But I'm sure others will go on the equity train. There is more than one way to skin a house
2008 was an effect, not a cause. The cause was increasing volumes of bad paper knowingly being written and sold into secondary credit markets between roughly 2002 and 2006. This all blew open in the summer of 2007 in the form of a global credit crisis. Though it conceivably could have been, there was no political will at that time to contain the crisis within the financial economy. It ultimately bled out into the broader "Main Street" economy where it finally cost jobs, sank asset markets, and generally sent the globe reeling into the financial tailspin that we all love to talk about today. Fundamentally, housing had no part in it at all.
But wasn't the bulk of the foul paper home mortgage based?
But wasn't the bulk of the foul paper home mortgage based?
Yes, it was. My point was that fundamentally, the problems were not related to housing markets.
Between the summer of 2000 and the summer of 2003, mortgage interest rates fell by 335 basis points. It would have been very odd indeed if home prices had not risen and a frenzy of buying and refinancing had not occurred. In the main, housing markets reacted just as they should have in that era, and they did so again as the Fed raised interest rates between mid-2004 and mid-2006. The peak in the housing market came in the Spring of 2006. There was nothing dangerous or unusual in any of that.
What was dangerous and unusual was the fact that for the sole sake of their own profits and bonuses, investment banks were at the time knowingly and deliberately selling into the secondary markets paper that they knew was destined to fail once interest rates began to rise. It didn't fundamentally matter what sort of debt that bad paper was created out of. All that mattered was that somebody created and sold enough of it that system tolerances were exceeded and those opaque tentacles of dreaded systemic risk slowly choked credit markets into effective inoperability. As has been noted above, credit is the life-blood of modern economies. A credit freeze is one of the worst things that can happen, and we've all seen since just why that is.
Yes, it was. My point was that fundamentally, the problems were not related to housing markets.
Between the summer of 2000 and the summer of 2003, mortgage interest rates fell by 335 basis points. It would have been very odd indeed if home prices had not risen and a frenzy of buying and refinancing had not occurred. In the main, housing markets reacted just as they should have in that era, and they did so again as the Fed raised interest rates between mid-2004 and mid-2006. The peak in the housing market came in the Spring of 2006. There is nothing dangerous or unusual in any of that.
What was dangerous and unusual was the fact that for the sole sake of their own profits and bonuses, investment banks were at the time knowingly and deliberately selling into the secondary markets paper that they knew was destined to fail once interest rates began to rise. It didn't fundamentally matter what sort of debt that bad paper was created out of. All that mattered was that somebody created and sold enough of it that system tolerances were exceeded and those opaque tentacles of dreaded systemic risk slowly choked credit markets into effective inoperability. As has been noted above, credit is the life-blood of modern economies. A credit freeze is one of the worst things that can happen, and we've all seen since just why that is.
I don't believe that the 2008 crash would have happened without a housing boom. Period. Other forms of debt were either not as large a problem, like credit card or college loans. Or not so systemically pervasive enough, like over zealous oil patch related debt.
Housing itself provided two necessary parts of the disaster. Volume and pervasiveness. And pervasiveness was related to both the borrowers, affecting home owners in about every neighborhood in the USA. And pervasiveness as in the global distribution of all the tainted paper. So the housing debacle negatively affected about every community in the USA, along with untold numbers globally.
This why my advisors and I personally became extremely defensive with my investments and housing decisions in 2005/6.
I don't believe that the 2008 crash would have happened without a housing boom. Period.
Well, if the housing boom had been the cause, the stock market would have crashed much earlier on. As things were, it waited around until a credit freeze could be created and then ultimately bleed out to spur the employment and aggregate demand declines that marked the onset of the worst recession in 75 years.
Quote:
Originally Posted by Hoonose
Housing itself provided two necessary parts of the disaster. Volume and pervasiveness.
These conditions have always existed. They are like the cosmic background radiation. The problems grew from financial misbehavior principally carried out between 2002 and 2006. Problems came to a head in the credit and asset market issues that emerged in 2007 and 2008, and they have of course been in a lengthy cleanup phase ever since. It was actions and conditions particular to that rather narrow window of time that were the causes of the problems, no matter whom the perps may hire to paint some different and more flattering picture for them.
Quote:
Originally Posted by Hoonose
This why my advisors and I personally became extremely defensive with my investments and housing decisions in 2005/6.
I am glad to hear that you fared well in those times. But the problems your neighbors may have had in those years were fundamentally caused far, far more by serious problems in the financial sector than by any sort of problems at all in the housing sector.
If there are no other costs associated with debt, yes.
Not necessarily. Credit in some situations and in some amounts is a good thing. That does not by itself mean that all expansions of credit are a net good, without doing a cost-benefit analysis. Only that the ideal amount of credit is definitely not zero.
This is mostly a reading comprehension issue. Sure, we can all spit out what we learning in economics or banking/grad school classes ROTFL
When Pub stated 'credit is a good thing', he was not implying that *ALL* credit is good. Jeez.
Well, if the housing boom had been the cause, the stock market would have crashed much earlier on. As things were, it waited around until a credit freeze could be created and then ultimately bleed out to spur the employment and aggregate demand declines that marked the onset of the worst recession in 75 years.
These conditions have always existed. They are like the cosmic background radiation. The problems grew from financial misbehavior principally carried out between 2002 and 2006. Problems came to a head in the credit and asset market issues that emerged in 2007 and 2008, and they have of course been in a lengthy cleanup phase ever since. It was actions and conditions particular to that rather narrow window of time that were the causes of the problems, no matter whom the perps may hire to paint some different and more flattering picture for them.
I am glad to hear that you fared well in those times. But the problems your neighbors may have had in those years were fundamentally caused far, far more by serious problems in the financial sector than by any sort of problems at all in the housing sector.
So you think 2008 could have happened without housing being involved? I just don't see that. The credit freeze and then reduced demands were precipitated by financial malfeasance primarily home mortgage related. I wouldn't doubt that the financials would have found some other pathway to soothe their greed, but IMO no other sector would have had the capacity for such worldwide destruction.
So you think 2008 could have happened without housing being involved? I just don't see that. The credit freeze and then reduced demands were precipitated by financial malfeasance primarily home mortgage related. I wouldn't doubt that the financials would have found some other pathway to soothe their greed, but IMO no other sector would have had the capacity for such worldwide destruction.
What Pub is saying is, it's not the housing market per se that's the issue, but the massive gambling on the housing market in the form of all the 'hyper' permutations of credit default swaps (etc.). The extra bad mortgages weren't the problem but what happens when there's no regulation on what happens downstream (upstream?). People buying a slew of condos trying to flip them alone won't crash our markets.
chees
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