🎛️ Simulation · Advanced
Easy Credit Housing Boom
Banks loosen lending standards dramatically, offering mortgages to almost anyone, while the Fed keeps rates low.
The facts
- Lending standards loosen from 50 to 10 (very easy credit).
- The Fed cuts rates to 1.0%.
- Home-building rules stay the same.
Your predictions
Playing it out…
Why?
Cheap money plus easy credit floods the housing market with buyers. Mortgage rates fall and home prices rise quickly — the recipe for the 2002–2006 housing bubble. Extra demand eventually spills over into general inflation. In the real 2000s, when rates rose and lending tightened, prices crashed and triggered the 2008 financial crisis.