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 ?
Oh no, this was all the fault of American sub-prime mortgages and, wait for it, the Tories.
Including sub-prime mortgages, the bonds were blamed for the collapse of the US property market and the following global financial crisis.
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.
I would rather she got her three million a week than some of these useless bankers who have plundered our accounts and played the markets - or handed out sub-prime mortgages that would never be paid back.
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.
The Q&A article covers a wide range of topics, including the possible effects of interest rate cuts by The Fed, and a reprieve for homeowners with sub-prime mortgages.
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.
Many sub-prime mortgages are interest only loans or adjustable-rate mortgages that offer a low introductory rate but increase in as early as a year from inception.