Some analysts admit that their fear that another economic bubble may arise has become greater than before. As the US real estate rates jumped from 25 percent to 65 percent, economists deem that this increase is overvalued. Using simple mortgage math, housing analyst Marc Hanson stated that the real estate in the US is now dangerously overpriced.
It was about a decade ago when an economic bubble disrupted the stability of the US economy. The subprime mortgage market crisis in 2008 was considered to be the most dangerous state after the Great Depression.
George Soros, one highly known investor, acknowledged that the upheaval in China's financial markets is quite similar to what occurred in 2008. However, some mortgage lenders consider the possibility that the next crisis will be worse than the previous one.
This has made lenders follow stricter policies compared to those before the start of economic bubble in mid-2000s. The qualified buyers are then complaining about not being able to get their real estate deals.
In the past two years, mortgage originations have continued to remain flat and lenders allow only fewer mortgages presently in comparison to their rates in 2012. This data from the Mortgage Bankers Association showed that 2012 was when the housing estate began its recovery.
The run up in the student loan debts gave a great worry to the economists. Additionally, junk bond prices have collapsed recently, adding to the concerns of economy watchers and analysts. These two recent occurrences are being compared to the 2008 crisis.
The 2008 crisis involved the steepest fall in savings and loan, the entire investment banking industry and the largest mortgage lender. It also affected the biggest insurance agency that time, as well as the government chartered mortgage lending enterprises and other two commercial banks.
The companies that relied on credits were greatly affected by this crisis at that time.
