Monday, 2 April 2007

Usury bringing grief to American housing market

Ed: See also my article on the church's understanding of interest payments.

[...] Viewed in hindsight, the debacle that is now unfolding was, like many such events, an obvious accident waiting to happen.

Around the turn of the decade, as the US housing boom accelerated, a large group of greedy American lending institutions became so rashly intent on maintaining the growth of their loan books at all costs that they began to hand out mortgages to borrowers with varying combinations of poor credit history, no steady source of income and little or no collateral.

As lending criteria grew more and more relaxed, the risks associated with this reckless “sub-prime” lending escalated, with vulnerable borrowers being given access to loans for 100 per cent of property values and high multiples of their incomes. And, just as soaring house prices meant that more people had to resort to such sub-prime loans, so sub-prime lending itself gave more fuel to the property boom. Read more

No comments: