smart spending

10 years that shook America's finances

Year 2001Year 2002Year 2003Year 2004Year 2005Year 2006Year 2007Year 2008Year 2009Year 2010

Year 2005: Subprime mortgages peak

  • The subprime mortgage boom peaks. Lenders hand out $625 billion in subprime loans, compared to $540 billion the year before. On top of that, lenders give $380 billion in Alt-A mortgages. Most of the Alt-A loans are low-documentation mortgages, otherwise know as "liar loans" because borrowers exaggerate their incomes with a wink and nod from their lenders.
  • An adage gains currency: Mortgage lenders are willing to give a loan to anyone who can fog a mirror. Urban legends tell of gardeners buying $500,000 McMansions. More than three-quarters of the 2005 subprime and Alt-A loans are sold on the secondary market. The market would explode in 2007 and 2008, igniting the worst recession since the Great Depression.
  • Congress reforms bankruptcy law to make it more difficult for consumers to file bankruptcy. The law prioritizes credit card debt higher than unpaid child support.
  • The Federal Reserve raises short-term interest rates eight times. The federal funds rate begins the year at 2.25 percent and ends it at 4.25 percent.
  • Nationally, home values rise more than 11 percent, according to the federal government's House Price Index. The National Association of Realtors distributes a "Housing Bubble Prospects Q&A" that assures consumers, "There is virtually no risk of a national housing price bubble based on the fundamental demand for housing and predictable economic factors."

-- Holden Lewis

advertisement

Show Bankrate's community sharing policy
          Connect with us
REFINANCE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed refi 4.08%  0.04 4.12%
15 year fixed refi 3.18%  0.03 3.21%
10 year fixed refi 3.21%  0.04 3.25%
 
View Rates in your area Next
Product Rate Change Last week
30K FICO-based HELOC 4.30%  0.03 4.27%
50K FICO-based HELOC 3.96%  0.01 3.97%
100K FICO-based HELOC 3.81%  0.01 3.82%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.75%  0.10 2.85%
48 month used car loan 2.99%  0.07 3.06%
60 month new car loan 3.20%  0.05 3.25%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 0.99%  0.01 0.98%
2 Year CD 1.22%  0.02 1.20%
5 Year CD 1.87%  0.04 1.83%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.76%  0.01 15.77%
Cash Back Cards 16.44%  0.04 16.48%
Low Interest Cards 11.04% --0.00 11.04%
 
Next
advertisement
FRUGAL NEWSLETTER

Discover new ways to cut costs and save more every day. Reduce your spending, not life’s pleasures. Delivered weekly.

advertisement
Partner Center
advertisement

Connect with us