The Federal Reserve made borrowing more reasonably priced, which increased demand for homes.
Eager to profit from the expanding market, lenders started providing mortgages to consumers with bad credit records, sometimes known as subprime mortgages. Many times, these loans had adjustable rates, meaning over time interest rates might rise noticeably.

Mortgage lenders grouping these loans together marketed them to investors as mortgage-backed securities (MBS). This technique helped to distribute the risk but also hid the actual danger connected with these subprime loans.

Burst of the Bubble

The flood of foreclosed homes lowers house values, therefore undermining equity and complicating sales processes for homeowners.
A credit freeze resulting from this made it challenging for banks to lend to companies and one another.

The Remarkables

The fall in the housing market has terrible results:

The fall in consumer confidence brought about by the collapse of the property market seriously reduced expenditure and caused an additional economic slowdown.

Summary

The fall in the property market between 2007 and 2008 was a complicated occurrence with several influencing elements. It reminds us sharply of the connectivity of the whole financial system and the need for sensible lending policies and efficient financial control.

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