[martinald]

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]

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]

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.

[dazc]

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.

[asteroidp]

It's amazing how tight people budgets are they simply can't absorb a relatively small increase