1 gen 1992 anni - Impact of Lawson Boom

Descrizione:

The Lawson Boom of the late 1980s caused house prices to increase. This led to many people taking out loans to buy houses as they feared that houses will only increase in prise.

When house prises went down and interest rates went up, people needed to pay off the debt from the loan. This led to many needing to sell their house in order to pay the loan. However since the house was now less valuable than it was at purchase, the loan was not fully paid off. This led to many people homeless and in debt. This is known as "negative equity".

By the start of 1992: 300,000 people were in negative equity.
By the end of 1992: 900,000 people were in negative equity.

There was a cycle in which more houses were being sold due to negative equity. But since the market was insecure, many people did not buy a house, causing house prises to fall. This caused more negative equity.