One factor that causes this change is a financial crisis. In 2008, the world's economy was hit with one of the largest financial crises and most it's dangerous since the Great Depression of the 1930's (Havemann, 2014). Even though this crisis started in the financial sector, it has affected literally everyone. The governments, banks, enterprises that facilitated mortgage lending, and insurance companies where the first to feel the effects but all the repercussions rippled down to effect the employers, the employees, and families' lives in general. .
How Has this Started?.
This all started with the good intention of making more profits through investments. When the investors saw the huge amount of money that they were making over mortgages, they wanted to do more but there weren't many more "qualifiable families" – families who had a good job and paid taxes. This led mortgage dealers to issue mortgages with terms unfavorable to borrowers, who were often families that did not qualify for ordinary home loans. Some of these so-called subprime mortgages carried low appealing interest rates in the early years that then increased to double-digit rates in later years. Some included prepayment penalties that made it prohibitively expensive to refinance. These features were easy to miss for first-time home buyers, many of them unsophisticated in such matters, who were made to believe that no matter what their income or their ability to make a down payment, they could own a home. That being said, mortgage lenders did not only hold the loans, happy at receiving the monthly check from the mortgage holders, but they were selling these loans to banks and investors therefore the risk was increasing. .
In time these "non-qualifiable" families started feeling the pressure and could not pay the mortgages therefore their house was taken. But since so many people were being driven away from their homes and their houses put for sale, the value of the houses plummeted down.
