Subprime mortgage crisis

Subprime mortgage crisis is the real estate crisis and financial crisis triggered by a dramatic rise in the mortgage delinquencies and foreclosures in the United States. Which caused major adverse consequences for banks and financial markets around the globe.

The problem rooted in 80% of U.S. mortgages issued in recent years to subprime borrowers were adjustable-rate mortgages. After U.S. house prices peaked in mid-2006 and began their steep decline thereafter, refinancing became more difficult. As adjustable-rate mortgages began to reset at higher rates, mortgage delinquencies soared. Securities backed with subprime mortgages, widely held by financial firms, lost most of their value. The result has been a large decline in the capital of many banks and U.S. government sponsored enterprises, tightening credit around the world.

 

 

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