Many of us who have experienced recessions in the previous years will compare the current recession as being one of the worst in generations. The speed at which the current banking and buy to let mortgage lending crisis took hold was breath taking Never before have we seen the worlds economies tumble as quick as they did at the recent downturn. What caused the mortgage and the economics crisis to get so bad and why did it affect the property sector so badly?

Well to understand why the world’s leading economies tumbled, we have to see what caused the mortgage crisis in the first place. The whole collapse of the financial sector can be attributed to the American government a few years ago. We are talking more specifically about the US democratic government who open the flood gates for mortgage lenders to issue residential and commercial mortgage loans to bad credit borrowers a few years ago. In fact, the Clinton administration encourages commercial mortgage lenders to issue mortgages more freely to get more people on the property ladder. This of course was a recipe for disaster. With the benefit of hindsight, we now know that the bad credit history mortgage borrowers were never going to pay back the money they borrowed and this left a big hole in the mortgage lenders’ balance sheets. There are now no more best remortgage deals.

What followed was a swift collapse of the world’s property markets and the realization that the banks were running without any cash. A few banks collapsed and some got rescued, but as it stands today, most of the banks have been left with very bad looking balance sheets and will rely on the governments to keep them afloat.

Brought to you by Buy to let mortgages

This entry was posted on Tuesday, December 1st, 2009 at 1:05 PM and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.