Based on the Rising Housing Prices of 2000-2005, Many Buyers

question 57

Multiple Choice

Based on the rising housing prices of 2000-2005, many buyers opted for interest-only loans and variable rate mortgages with little or no down payment because

• A) they expected short-term interest rates to fall substantially in the future and this would reduce their monthly mortgage payment in the years ahead.
• B) variable rate mortgages are a good way to reduce the risk accompanying your investment when you plan to stay in the house for a long time.
• C) they thought housing prices would continue to rise and therefore they would be able to sell the house for a profit within a couple of years.
• D) they could easily recoup their investment, even if there was a downturn in housing prices in the future.

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Definitions:

Overbenefited

A situation where one receives more benefits or resources than what is fair or deserved.

Inequity

A condition under which fair treatment is not received or given, often leading to disparities among individuals or groups.

Inequality

The state of not being equal, especially in status, rights, and opportunities.

Commons Dilemma

A situation in which individuals' short-term selfish interests are at odds with long-term group benefits and social sustainability.