Well, the fed feels the need now to drop the fed rate and get interest rates way lower. One reason is to make it more affordable for all of these homeowners with the adjusting rates, but that doesn't affect it enough, even if it's 2% drop which would never happen. In addition it's to stimulate the economy again with banks lending to banks etc, when the fed rate lowers. The problem is every time you lower the FED rate like they are, to solve a temporary problem in their eyes, it directly devalues the US dollar. It's kind of a catch 22. It's one or the other.
The biggest problem is that people have been living on credit cards for a long time, and this past 7 years with inflation, house prices, people used their houses as an ATM machine, which is now going to backfire because with adjusting rates and all that is going on, people are running out of money to keep spending in the economy. US people spend more than they make. People can say that money is still being spent for shopping at malls, yes maybe some of the $200,000 they took out in home equity is still left, or now they are already seeing a spike in cash withdrawls on credit cards to be used for living and or house payments. They are saying 70%+ of the entire economy is based on consumers consuming, so everyone needs to keep consuming to keep it going.
Everyone wants to blame crooked loan people, fraud transactions, etc for getting uneducated people into their messes, well that's not always where the blame is, think about it this way....
Joe Smith lives in a house for 10 years comfortably paying the $200,000 mortgage, paying it down little by little, but not much, and can make that payment barely. One day someone says go buy a house for $400,000 it's really nice, he says I can't afford it , I have been just barely comfortably living in the $200,000 house.
1 year later a loan person convinces him to take $200,000 out as a home equity loan, that's the same thing, now he has a balance of $400,000. He couldn't afford that, but feels rich, but now with house prices falling by the day, all he really did was take out a big credit line, he wasn't rich like he thought.
I watched these 11 videos this weekend, they are pretty good
https://youtube.com/profile_video...etreefilms&p=r