...isn’t this what caused the first housing bubble?
This dumb policy, rooted in the Community Reinvestment Act under the Carter administration, was only a minor contributor to the housing bubble.
The biggest culprit by far was the Federal Reserve. Had the Fed not intervened throughout the early 2000s to keep interest rates artificially low, had the Fed allowed interest rates to rise to reflect the increasing demand for loanable funds, then the higher interest rates would have choked off the bubble.