The basis of the speculative bubble would be an overdevelopment of credit, helped by low interest rates that were established in major world economies. The origin of this situation, according to some analysts, has been the one hand, the outbreak of the burbuja.com the late 90′s, which would have caused a massive flight of money looking for safe returns, and secondly, the systematic lowering interest rates after the attacks of September 11, 2001, aimed at preventing a global economic crisis. During this period there was a flight of capital from both institutional and family investment in the direction of real estate. The attacks of September 11, 2001 were an international climate of instability that forced major central banks to lower interest rates at unusually low levels in order to revive the production and consumption through credit. The combination of both factors led to the emergence of a housing bubble based on enormous liquidity. End of bubble.
In 2004 the Federal Reserve of the United States began to raise interest rates to control inflation. From then until 2006 the rate rose from 1% to 5.25%. The growth of housing prices, which had been dramatically between 2001 and 2005, became a steady decline. In August 2005, housing prices and the rate of sales declined in much of the United States abruptly. Foreclosures due to unpaid debt grew dramatically, and many organizations began to have problems with liquidity to repay investors or funding from lenders. The total number of foreclosures in 2006 reached 1,200,000, which led to the failure of half a hundred mortgage lenders within a year. For 2006, the housing crisis had moved to the Exchange: the index of the U.S. construction (U.S. Home Construction Index) fell by 40%. Finally, the Fed decided after August 2007, raising rates again, without preventing the collapse of the housing market.
Meanwhile, the euro zone, European Central Bank raised interest rates steadily, with the same effect, although after the start of the credit crisis did not respond by lowering rates, but that rose more gradually .
The subprime mortgages, known in America as subprime loans were a special type of mortgage, preferably used for the acquisition of housing and aimed at customers with poor credit, and therefore with a level of default risk than the average remaining credits. Its interest rate was higher than on personal loans (although the first years have a promotional rate), and bank charges were more serious. U.S. banks had a limit the granting of such loans, imposed by the Federal Reserve.
Given that debt can be sold and economic transaction by buying bonds or securitization of credit, subprime mortgages could be removed from the asset side of the concessionaire, being transferred to investment funds or pension plans. In some cases, the investment was made through so-called carry trade. The problem arises when the investor (which may be a financial institution, bank or an individual) The true risk involved. In a global economy in which financial capital circulating at high speed and change hands frequently and offers highly sophisticated financial products and automated, not all investors know the ultimate nature of the contracted operation.
