2. PRIME
These are the loans that are offered to borrowers with good credit
histories and carry lower interest and low rates.
SUBPRIME
These are the loans that are offered to borrowers with
bankruptcies, defaults, or late payment histories.
3. The United States subprime mortgage crisis was a nationwide
banking emergency, occurring between 2007 and 2010, that
contributed to the U.S. recession of December 2007 – June 2009.
It was triggered by a large decline in home prices after the
collapse of a housing bubble, leading to mortgage delinquencies
and foreclosures
4. HOUSING BUBBLE
A housing bubble is an economic bubble that occurs in
local or global real estate markets. A bubble is an overheated
market in which there are too many buyers who are too keen to
buy.
As a result, prices rise way too fast, and this situation
becomes unsustainable. Eventually, some people realize this
and start to sell out.
The whole process goes into reverse equally rapidly, and the
bubble bursts, with people selling in panic so that prices plunge.
5. Up until 2006, the housing market in the United States was
flourishing due to the fact that it was so easy to get a home loan.
Individuals were taking on subprime mortgages, with the
expectations that the price of their home would continue to rise
and that they would be able to refinance their home before the
higher interest rates were to go into effect. 2005 was the peak of
the subprime boom.
However, the housing bubble burst and housing prices had
reached their peak. They were now on a decline.
