Sub Prime Lending - Essay Example

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Sub Prime Lending

This led to a subsequent boom in housing markets in all most all parts of the world.
Requirement for possessing ones' own house in the US was further fuelled by a normal liberalisation of approval standards for contributing to the growth of "teaser" loans. These loans came with relatively low primary repayment charges. Ultimately this led to the speeding up of financial conceptions which has made it possible for mortgage financing to be more easily accessible.
In this dissertation we are going to examine the growth of the sub prime lending industry, and will also discus the viability of a business model for lenders. Keeping in mind the current credit crunch and sub-prime lending particularly mortgage lending; we believe that this research will attempt to lay the foundation on future research as to what may be done to rectify financial institutions in the United Kingdom. We would like to discuss the rise and fall of sub prime lending from home owners perspective also.
Sub prime mortgages can be defined as residential loans that are not conforming to the Criteria for prime mortgages and so their probability of full repayment is low. ...Show more

Summary

The advent of sub prime lending in mid 1990s made it possible for many people to get credit especially those who belong to the low net income or are having lower than average credit score. Over the years the sub prime sector of the mortgage industry has grown from one hundred and billion pounds in 1998 to five hundred and three billion in 2008 or about a quarter of the mortgage market (IMF 2008)…
Author : gregorioolson
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