The author’s position regarding the role of US monetary policy and the housing market bubble during the early 2000’s is that they don’t “believe that the monetary policies of the period played a large role” (Dokko et al., 2009, p. 3). Therefore, in their view, the three causes that contributed to the housing bubble were low mortgage interest rates, low short-term interest rates, and relaxed mortgage lending standards.
One crucial cause of the housing bubble was the widespread belief that home prices would continue to rise. Therefore, allowing borrowers to get low mortgage interest rates. The belief was if “borrowers continued to accumulate housing equity and lenders and investors were profitable, mortgage credit was readily available and this
One crucial cause of the housing bubble was the widespread belief that home prices would continue to rise. Therefore, allowing borrowers to get low mortgage interest rates. The belief was if “borrowers continued to accumulate housing equity and lenders and investors were profitable, mortgage credit was readily available and this