Example of sub prime mortgage loan
House prices 2million won
1 million won my money and bank loans 1million to buy a house
If house prices rise 1million won
Maintain bank loans 1million won
Add of 1million money to 1 million won my money
Currently my money: my money : 2million won –bank loans : 1 million won = 1 million won
If house prices fall 1 million won
Maintain bank loa
(1) Bubble increase of the housing industry.
Following is the background of Bubble increase of the housing market.
Easy Money Policy of FRB(Federal Reserve Board)
In the housing industry of USA formed mortgage-system, the interest-rate is the factor that decide market price and adjust the demand and supply of the housing market, and also is main channel of currency policy.
After 『dot-com
households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the credit event but some economists say it has just begun and long way to go. So we would like to take a close look at the mortgage loan in U.S.
households. Then household loans drastically increased and this consequently produces 'House Poor' who is suffer from the housing problem(burdened by mortgage and loan debt). The house poor problem is pandemic in Korea. Thus, we are still suffering from the credit event but some economists say it has just begun and long way to go. So we would like to take a close look at the mortgage loan in U.S.
1. What is subprime mortgage?
- America’s mortgage rating agencies categorize
people with a credit score into three classes.
The lowest of these is “subprime”
2. Why was subprime mortgage a significant influence?
- Lehman made financial derivatives like MBS,
CDO and CDS with reorganized loans from
subprime mortgages. These caused Lehman
Brother’s debt to grow astr