real estate to hot up on stock market depressd, page-29

MrSteve,

The banks lost all this money because they underestimated the deliquency rates on the subprime loans, due to relaxed borrowing standards which allowed people to take on loans they couldn't afford once the initial honeymoon rates were over.
Hence as I have already said, if people could make the repayments on their loans then the record foreclosures would not have eventuated.
The bandaid solution was to have subprime loans refinanaced into further subprime loans with honeymoon periods, however as the housing prices started to fall they couldn't refinance as they do not have enough equity.
So in short, yes the falling house prices caused the bank losses, but it was becasue people initially defualted on their loans.
Lets get our facts straight, at now stage have I posted that housing prices fell after subprime. All I said was that the effect of defaults is falling house prices.
Notwithstanding this there are many reasons why property prices fall. There is no one factor.