housing industry through mortgage finance.
The opening of 2000year, FRB had lowered Federal Fund Rate to 5.5% from 7.5%. So it offered a factor that make a bubble of housing industry through mortgage-loan.
Therefore FRM was reduced from 7.5% to 5.5% suddenly, ARM also was reduced from 7% to 4% rapidly.
Demand of houses because of low interest, reproviding fund through refinancing and so on, t
Problem developed when the government raised interestrates to contain inflation. Paul Volcker of FRB led retrenchment policy, aiming to reduce inflation. This policy raised interestrate to up to 19% and caused inflation rate of 13.5% (1981) plunge to 3.2%(1983). Therefore, steep increase of interestrate put people with housing loan unable to redeem their loan. Since they were unable to replay
Early 2000, American was in an economic recession from Information Technology Bubble Decay, 9.11, Iraq war.
So America enforced Low interestrates to stabilize the economy.
After then, Housing Finance Interest was decreased and Real estate Price was increased.
loans to households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the credit event but some economists say it has just begun and long way to go. So we would like to take a close look at the mortgage loa
loans to households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the credit event but some economists say it has just begun and long way to go. So we would like to take a close look at the mortgage loa