What is a Subprime Mortgage?

Subprime mortgages are loans provided by some lenders to borrowers with poor credit and low income. After the economic recession in 2001, the US housing market was highly prosperous stimulated by ultra-low interest rates, which played an important role in economic recovery and its subsequent sustained growth, and the subprime mortgage market developed rapidly. However, as the US housing market has cooled significantly and interest rates have risen, many borrowers in the subprime mortgage market have failed to repay their loans on schedule, causing some lenders to suffer severe losses or even go bankrupt. The 2008 US subprime mortgage crisis raised investor concerns about the health of the entire US financial market and the prospects for economic growth, leading to sharp stock market shocks in the following years.

Subprime mortgage

Subprime mortgages are loans provided by some lenders to borrowers with poor credit and low income. in year 2001

Subprime mortgage loan ("subprime mortgage loan")

The "subprime" and "prime" of the US mortgage market are demarcated by the borrower's credit conditions. According to the level of credit, lenders treat borrowers differently, thus forming a two-level market. People with low credit cannot apply for preferential loans.

The so-called subprime mortgages are issued to families and individuals with low incomes, minorities, low levels of education, and lack of financial knowledge

Subprime mortgages are offered to borrowers who are discriminated against or do not meet the standards of the mortgage market

There are six: premierplus, premier, A-, B, C, C-. Rating criteria for applicants

Subprime mortgages have good market prospects. As it is offered to borrowers who are discriminated against or do not meet the standards of the mortgage market

The subprime debt crisis has caused less direct losses to Chinese-funded commercial banks, but commercial banks should still take precautions and take precautions.

U.S. Subprime Mortgages

2008 latest mortgage interest rate table:

2008 mortgage interest rate table

The monthly equivalent of personal housing loans is 10,000 yuan as an example. 16-30 years

Calculation method:

Loan amount X average monthly repayment / 10000 = actual monthly repayment amount

For example:

Assuming a loan of 500,000 and a loan life of 30 years,

The monthly repayment amount is 50X64.23 = 3211 yuan.

Loan for 20 years, monthly repayment amount is 50 * 75.48 = 3774 yuan