Subprime Mortgage Crash
The subprime mortgage crash was a financial crisis that began in 2006 and lasted until the late 2000s. It was caused by the buildup of subprime mortgages, which are loans made to borrowers with poor credit histories. As interest rates rose, many borrowers were unable to keep up with their payments and defaulted on their loans. This led to a wave of foreclosures, causing home prices to plummet and leaving homeowners owing more than what their homes were worth.
The collapse of the housing market had far-reaching economic effects beyond just those affected directly by foreclosure. Banks tightened lending standards, making it harder for people to get approved for mortgages, while businesses suffered from reduced consumer spending due to lost jobs or decreased wages. The stock market also took a hit as investors became wary about investing in financial institutions exposed to bad debts from the housing market crash.
In response, governments around the world enacted policies aimed at stabilizing markets and providing relief for those who had been hurt financially by the crisis. Governments pumped billions into banks via bailouts or other forms of assistance; some states implemented foreclosure prevention programs; and central banks lowered interest rates in an attempt to spur lending activity again (which has since returned).
