The property boom years prior to the Global Financial Crises of 2007-2008 saw everyone and their dog becoming property investors. It was a crazy time for many with people buying anything to get ‘on the property ladder’ and the ‘reality’ TV shows of the day making it seem so easy. All you had to do was buy a dog at an auction for well below street value, then do ‘a reno’ and sell it, again at auction, for way over the reserve. Simple!
The reality was that while not as easy as that, it wasn’t that hard and part of the reason was that banks were virtually throwing money at anyone they felt could make the payments and even if they couldn’t, they were re-selling soon so no problem. At least that was how it often looked. It is true banks and lending institutions did relax considerably the lending criteria they had applied for decades and it was simpler to get a mortgage. Of course when interest rates soared in 2008, although nowhere near as high as they had in 1986-87, many were left holding paper on properties that were not fetching anywhere near what they were mortgaged for.