 Quote:
Originally Posted by ziggy29
It's not just low rates that got us into it.
It was a combination of low rates, careless lending practices and reckless products like nothing-down, interest only ARMs.
If they stuck to more "conventional" funding of fixed-rate mortgages for decent credit risks, much of this wouldn't happen. Yes, home prices would have risen some because most people define what they can "afford" in terms of monthly payment rather than price... but it wouldn't have been nearly the toxic mess that occurred in the last several years.
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Yes, I agree.
My off topic point was that high rates
a) would make people want to borrow less
b) would probably give the banks more money to lend (people likely to invest in cash because it pays higher)
c) people already in trouble would have their situations get wrecked quickly (and fixed quickly)?
IMO keeping rates low for such a prolonged amount of time is delaying a further crash, not preventing a crash.
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