Did Low Interest Rates Cause The Bubble?
No way! The article below from The Wall Street Journal states that many economists feel it did. That just shows how little they know. It was the no down payment loans, the no income no asset loans, the stated income stated asset loans, appraised values being inflated, etc.
It doesn’t take a degree from Wharton to figure that out. If you read the book called “Chain of Blame: How Wall Street Created The Credit Crisis” you would know exactly what I am talking about. The Wall Street firms and rating agencies who in the end have the final say as to what is safe or not were only underwriting 20-30% of the loans that came through their doors. To make matters worse they contracted the underwriting out, let loans with no appraisal and a letter from a borrower stating the value of the property just skate on by.
I could go on for days about this. They still don’t get it and neither does HUD. HUD allows loans to be given to those who are only putting 3.5% down, getting seller contributions, and having no money left over after closing.