People were lead to believe by the so call independent loan brokers, Banks and Loan Companies that any body could buy and own an expensive house with inflated price instead of paying similar figure as rent, and for this they presented a non down payment plan and a very attractive variable loan with expenses attached to the loan, due for refinance in three years, many didn't know that there was a penalty if was done before, The rosie scenario was that the property price would continue increasing in value and on three years they could have a nice equity,refinance and profit on the property if sold.
Wrong: "The bubble burst" property prices came down and interests went up affecting in particular those variable loans.
The Feds may reduce interest rates 0.25% or even 0.50% bases point one more time this year at a cost of some Inflation.
The stock market had been affected at some point, and the high price of Crude Oil is not helping, we hope the Xmas sales will aid some how.
Missinformation, Ignorance and greedy had much to do with this mess. Many of the Lenders are Corporations in others countries and some of the Loan Companies are allready out bussines.
The prices drop of 30% that you mention is conservative and could grow more.
Even with the propossed 5 years interest freeze moratorium for the Banking Industry many homeowners won't be able to pay the mortgage, even at fixed interesr rates.
The surplus inventory of houses is overwelming.
But be awere and have patience this will be gold opportunite for many, be liquid and stay put for about one year.
There are similar danger in the Credit Card balances per person and also some Car Dealers are offering a non down payment, no license, no residence to make a deal.
When are we going to learn the lesson as responsable consumers we are.
People have to learn their buying limitations.
We can not expect that good Govertment is going to be here to bail us out next time.
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