Glossary of Business Terms - Subprime Crisis |
Subprime
Crisis : Is a 2007 financial
crisis that started in the United
States of America from the high number
of defaulting borrowers with subprime
mortgages.
The
elevated risks that financial institutions
were taking with subprime mortgages in the
USA
began to create problems towards the end
of 2006. Borrowers began to default on their
loans in higher numbers, which created a
global credit crisis. Central banks were
forced to inject money into financial markets,
more than one hundred subprime lenders in
the United States collapsed, and global
economic growth was expected to slow.
Problems in the subprime market began to
arise in the United States after a real
estate boom prompted financial companies
to aggressively market subprime mortgages
to borrowers that did not have the capacity
to repay the loan.
While the subprime mortgage
meltdown was mostly an American problem,
financial markets around the world have
been affected by it.
Also called : Subprime mortgage meltdown,
Subprime credit crunch, and US Sub prime
crisis.
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