Origin of the 2008 crisis

With the neutralization of inflation, short and long-term interest rates went down after 1980. These low rates indirectly sparked the housing market.

In 2002, the dotcom bubble had burst, and the economy was tanking. Some economists made no mystery about encouraging the housing market to compensate for the downturn.

The housing boom attracted predators: -Buyers whose goal was just to resell the house for short-term profit. -Unscrupulous lenders who accepted false information (income, savings…) from buyers, or who pressed weak buyers to contract heavy mortgages. These practices didn’t slow down the housing boom…

With such historically low interest rates, housing prices were expected to rise. However, the rise was steep despite the new constructions, which were to supply this demand for housing. Eventually, mortgage monthly payment were proportionally more expensive than rents. It couldn’t last…