Subprime mortgage

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Subprime mortgage

Subprime refers to higher the risk. These are mortgages that are issued to individuals who are often not qualified. That is, the long term monthly mortgage payment is more than their income. Often, these mortgages are issued on the expectation that the homeowners income will rise in the future. These mortgages are often made feasible by teaser rates. This means that the rate might be very low for the first few years but then rise steeply. In periods of weakness in the housing market or the economy in general, these mortgages are the first to run into trouble.

Subprime Mortgage

A mortgage with an interest rate higher than most other mortgages. Subprime mortgages are provided to borrowers who do not qualify for ordinary loans because of bad credit history or some other reason. There is a higher risk of default on subprime loans. Their prevalence was a significant factor in the 2008 credit crunch.
References in periodicals archive ?
Figures released by the Department of Finance have shown that one in every four home repossessions since the beginning of 2012 related to sub-prime mortgages.
uk revealed that people searching for whole of market advice on sub-prime mortgages have leaped, increasing from three in September to seven per cent in October.
Capital Economics thinks sub-prime mortgages, which triggered the crisis in the US, cover 6-8% of total mortgages in the UK.
The company is gaining significant notoriety regarding its business plan/model and is receiving major interest from investors world wide, if management agrees to all investor terms and conditions (which they see no reason not to) the company will have an initial investment capacity of 50 million dollars to go after many discounted sub-prime mortgages and or portfolios.
3bn, with the results hit by provisions taken against investments in US sub-prime mortgages and other products.
Sub-prime mortgages, those issued to people with shaky credit, were repackaged as securities and sold worldwide.
HSBC said that it would continue to offer some sub-prime mortgages through its US branches.
But A&L revealed that losses from investments knocked by the credit squeeze and those linked to US sub-prime mortgages would be more than three times the pounds 55m it estimated last November.
The group said there had been a 54% drop in the number of different sub-prime mortgages available, with 4,371 different home loans withdrawn since July this year.
Financial analyst Datamonitor revealed yesterday that the market in sub-prime mortgages - special high-rate loans for higher-risk buyers - will grow by pounds 7.
In just one example cited by Newsweek's Robert Samuelson in the Washington Post, "HSBC--a major bank holding company--announced more than $10 billion in losses" on sub-prime mortgages.
Sub-prime mortgages are made to people with low incomes, a track record of missed payments or limited credit histories.