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progree

(11,966 posts)
9. That really sucks. It was rising interest rates that popped the 2007 housing bubble
Wed Jan 2, 2019, 11:20 AM
Jan 2019

It's not solely to blame, not by a long shot. There were so many excesses in the housing and mortgage markets before then -- liar loans for anyone who could fog a mirror, the bond rating agencies like Moody's and S&P rating bundles of these mortgages as AAA, mortgages sold with low teaser rates and people were qualified based on these low teaser rates, and not the rates they would be paying 2 years later after the teaser period was over, derivatives, etc. etc.

So there was a huge huge bubble waiting to burst. But the pin prick that burst the bubble was the rising interest rates that caused ARM mortages to adjust upward and upward and defaults began accelerating and boom.

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