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As Mortgage Rates Spike, How Do We Prevent Future Housing Disasters?

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If interest rates

had not been held too low too long, we would not have had the current bubble and burst (crisis).
The next crisis will be avoided similarly (if it is) by insisting on realistic long term rates. Hint: It ain't five percent. Something more like eight percent is what is needed.

Muser of NM @ Jun 15, 2009 21:54:56 PM

How Do We Prevent Future Housing Disasters?

A lot of folks involved in mega lending decisions and policy may not have been around in the late 80s or perhaps they just didn't remember, or chose to forget the calamity and fall out from the S&L crisis and the establishment of the RTC to clean up the debris.
Today we have tools like the Case-Shiller index to gauge home values as they relate to other factors like affordability, employment the emergence of new non-prime loan programs and such.
The bottom line is that real estate prices are cyclical and with that so are losses. We should have enough historical data from the last 20 years to be able to predict increasing levels of risk as real estate markets heat up.
If the market does not employ these types of risk analysis we can pretty much guaranty another housing disaster down the road which could be even worse than the one we are currently in.

Perry Austin of TX @ Jun 15, 2009 14:26:16 PM

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As Mortgage Rates Spike, How Do We Prevent Future Housing Disasters?

If interest rates

How Do We Prevent Future Housing Disasters?

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