The number one reason for the housing bubble was that the federal government insured loans to unqualified borrowers thereby eliminating the risk to lenders.
The government basically handed out free call options to lenders.
Or are you really under the impression that capitalists would give 30 year loans at super low rates to borrowers with literally no skin in the game?
Do you know the percentage of bubble loans were actually backed by the federal government? It was less than 40%. Don't believe me? Check for yourself
here (says 40% overall) or
here (says 24% at the peak). It's true that Fannie and Freddie own a larger percentage of loans
today, but that's only because so many
private institutions went bankrupt
after the housing crisis.
The fact is, the housing bubble was caused by greed. That greed was partly fueled by government incentives, but it was the unchecked and unregulated
private lenders that did the most damage. Fannie and Freddie weren't even allowed to underwrite more than $417K for a home, which pretty much eliminated all the McMansions that were fueling the bubble in the first place.
But to answer your question: YES, capitalists were all-too-eager to give 30-year loans at super low rates. You know why? Because they knew they could immediately package the loans with some other securities and sell them at a massive profit to unsuspecting investors, all without the slightest bit of government intervention.
If anything, it was one of the last examples of pure capitalism that this country has seen. No rules, no regulations, just profits. It was the wild wild west all over again, if only for a few years.
And don't forget that this ALL happened when Republicans controlled the White House AND both chambers of Congress! George Bush
repeatedly praised the housing boom as a shining light of capitalism, and he did everything he could to loosen the regulations on home buying. NOBODY (except Ron Paul) suggested that we try to slow things down (not even the Democrats).
I can't tell if you're trying to re-write history or if you're a 7th grader who's just learning this stuff, but either way you should familiarize yourself with the subject. I suggest starting
here and
here.