3 ms·

Taking a car that does 25mpg, at $2/gal gas you can do a 100 mile round trip commute each workday for $160/month in gas. At $4/gal it goes up to $320, etc. That

Taking a car that does 25mpg, at $2/gal gas you can do a 100 mile round trip commute each workday for $160/month in gas. At $4/gal it goes up to $320, etc. That doesn't seem like a big enough jump to me to cause people to default en masse on their mortgages and trigger the crisis - compared to the teaser rates which probably made mortage payments jump by $500-1000+ when expired?

HideousKojima 5y ago
Higher gas (and petroleum product and energy in general) prices have a lot of knock-on effects on prices beyond just the cost to make a commute. The costs of delivering goods goes up, higher energy prices means lower profit margins for virtually every industry, etc.
ryanSrich 5y ago
I agree. But then again, most of my knowledge of the housing crash comes second hand. It didn’t impact my parents (rural area, one mortgage), and I don’t personally know anyone that defaulted or had their parents default. On the other hand I acutely remember the gas prices at that time. I was a senior in high school and filling up my tank was something i specifically had to save a decent amount of money for. So perhaps that was the bigger issue, but it does feel like an insignificant amount of money in the grand scheme.
asteroidp 5y ago
It's amazing how tight people budgets are they simply can't absorb a relatively small increase
dazc 5y ago
From memory, people were getting large mortgages they couldn't afford once the teaser rate had expired (usually 1 - 2 years). The reason they were able to get these mortgages is because lenders were doing little or no due diligence. This did coincide with a period when fuel prices were rising but, I think, this was more a case of 'the last straw breaking the camel's back' rather than a direct causation of financial distress.

3 ms·

Taking a car that does 25mpg, at $2/gal gas you can do a 100 mile round trip commute each workday for $160/month in gas. At $4/gal it goes up to $320, etc. That

by martinald 5y ago

HideousKojima 5y ago
Higher gas (and petroleum product and energy in general) prices have a lot of knock-on effects on prices beyond just the cost to make a commute. The costs of delivering goods goes up, higher energy prices means lower profit margins for virtually every industry, etc.
ryanSrich 5y ago
I agree. But then again, most of my knowledge of the housing crash comes second hand. It didn’t impact my parents (rural area, one mortgage), and I don’t personally know anyone that defaulted or had their parents default. On the other hand I acutely remember the gas prices at that time. I was a senior in high school and filling up my tank was something i specifically had to save a decent amount of money for. So perhaps that was the bigger issue, but it does feel like an insignificant amount of money in the grand scheme.
asteroidp 5y ago
It's amazing how tight people budgets are they simply can't absorb a relatively small increase
dazc 5y ago
From memory, people were getting large mortgages they couldn't afford once the teaser rate had expired (usually 1 - 2 years). The reason they were able to get these mortgages is because lenders were doing little or no due diligence. This did coincide with a period when fuel prices were rising but, I think, this was more a case of 'the last straw breaking the camel's back' rather than a direct causation of financial distress.