House of Cards Article Summary

The stock market has experienced its largest drop since the September eleventh attacks due to the fact that subprime mortgage markets with poor credit ratings are spreading. Because of lower interest rates mortgage payments are becoming easier to pay, even though the overall housing costs are rising. “Interest rates were slashed by the Federal Reserve in 2001.” It is now easier than ever for low income families to afford homes. They are taking out loans half or more of their annual income and are not able to pay them back, most of these mortgage loans are predicted to end in foreclosure. Now “forty percent” of home owners are considered “risky” consumers, and they are the reason for the increased prices in homes. Finally, actions are being taken and it is now harder to receive a “risky” loan. “Therefore closing rates are increasing, and home prices are lowering.” The bottom line is the Federal Reserve mad a mistake in cutting interest rates and now the only way to keep housing prices down is for people not to take out loans that they cannot afford.