what means Subprime mortgage crisis?

[jainthomas]

Hi


In the recession time I was frequently confused with the term Subprime mortgage,It mainly seen in news related to bankrupt cases,If you are strong enough in finance and economics please give me a valuable reply

 

[theBrain]

Hi there,


we can tell a sub-prime mortgage as a loan offered by a lender to a borrower with a poor credit history (meaning he has defaulted on his financial commitments in the past) against the security of his house property. Such borrowers are called sub-prime borrowers. Since the risk of default is high, these loans are offered at relatively higher interest rates compared to loans offered to people with an impeccable repayment track record. However these sub-prime mortgage loans are relatively much cheaper than completely unsecured loans to the same profile of borrowers.


hope you got the answer.