> Are you saying that people learn lessons from bubbles?
No, sorry; I guess that was worded awkwardly. I'm saying that the process by which US'ers get mortgages has had a [positive!] sea change (or 5), and it's not going back to the way it used to be when this is over. Part of this froth was caused directly by things like over-optimistic pre-quals and booby-trapped ARMs, but the upside for those not caught in the subprime fraud has been quite good: and there are a lot of us. We're all in a much better position than our parents were to buy a home and to benefit from it. My earlier example of beating down PMI is a good example, and the general capability of HELCs is positive. Refinancing, to take advantage of interest rate moves, is now commonplace. Even the broad availablility of interest-only mortgages for 1/4 point over the going rate is a huge and powerful innovation; I got my mom into one recently when she moved for what is likely the last time: she doesn't need to make principal payments that she'll never see (effectively becoming 'life insurance' with no appreciation) ... she needs cash flow on a fixed income. This is perfect for her. That would have been unavailable even in the last decade or only on uneconomic terms.
I can directly compare experiences in 1994, 1998, 2003 and this year and plot a line straight up in efficiency, cost-effectiveness, and sophistication in terms of the relationship between me and the banks.
Usually the sophisticated (read: cost-effective, fair) instruments are for pros or richies only. I remember not too long ago getting a pitch from Citibank on their "Multi-money" account, which would pay daily market rates on savings denominated in any one of like 12 currencies and would allow swapping between currencies (at ATMs!) for no-fee and at the $1M cross-rate (have you changed money lately? What rate did you pay on $200? If you say "less than 7%" consider yourself savvy!). The catch was you had to have at least $500k in the account. Well, now we have 5% FDIC-insured no-minimum "money market" savings accounts [Pioneered I think by ING/Orange, but everyone jumped on it]; nice jump from what was a < 1% often-monthly-charged boondoggle, and it's effectively the Big Boy Rate. This is a continuation of the "discount brokerage" phenom, which is still getting ratcheted up by places like SogoInvest:
http://members.forbes.com/global/2006/1127/057.html
/jordan