New orders for equipment and software hesitated in the middle of 2000 and then fell abruptly as firms re-evaluated their capital investment programs. Uncertainty about economic prospects boosted risk premiums significantly, and this rise, in turn, propelled required, or hurdle, rates of return to markedly elevated levels. In most cases, businesses required that new investments pay off much more rapidly than they had previously.
These questions have challenged traditional assumptions that lending for housing purposes is generally a safe and low-risk activity, and highlighted potential dangers that central banks and banks need to be concerned about.