Realist, not conformist analysis of the latest financial, business and political news

Did The Mortgage Markets Really Cause The House Price Bubble?

If credit supply eases then presumably things bought with that expanded credit supply rise in price? Well, yes, obviously, right?

Credit supply and housing speculation

Atif Mian, Amir Sufi 19 August 2018

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Spike
2 years ago

The US has for decades worked to “support the housing industry” and realize the “American dream of home ownership,” mostly by setting the prices of things wrong, notably the price of a home loan. Not only did this make more money available to buy homes, it made a lot more money available to poor credit risks for political reasons. Bill Clinton famously defined mortgage equality as equality-of-result, and advised banks that their results would be reviewed on any move that might require government approval. The agencies called Freddie Mac and Fannie Mae bundled mortgages into packages for easy resale, but… Read more »

Spike
Spike
2 years ago

The US has for decades worked to “support the housing industry” and realize the “American dream of home ownership,” mostly by setting the prices of things wrong, notably the price of a home loan. Not only did this make more money available to buy homes, it made a lot more money available to poor credit risks for political reasons. Bill Clinton famously defined mortgage equality as equality-of-result, and advised banks that their results would be reviewed on any move that might require government approval. The agencies called Freddie Mac and Fannie Mae bundled mortgages into packages for easy resale, but… Read more »

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