Subprime Mortgages

The mortgage business in the USA is quite different to that operating in the UK. For example, in the US 100% of mortgage interest payments are tax deductible. Furthermore second and third mortgages qualify for the same benefits, meaning that mortgages of one sort or another are a very favorable way of borrowing money.

Such advantageous terms do not apply to consumer goods, including motorcars that for many people are the second most expensive purchase after their house. Therefore, before the incidence of subprime mortgage lending, there were many poorer people, without homes of their own, who had to pay higher interest rates for anything they purchased on credit.

Along came sub prime mortgage lending and an unprecedented borrowing spree, usually secured against rising house prices. It was all very well while house prices kept on rising, and lenders and borrowers were having a whale of a time. It seemed that times were too good for anybody to even contemplate that the bubble could ever burst.

Burst it did and house prices went into reverse. There were just a few professionals who saw the downturn as a correction rather that a decline, simply because a totally unregulated market had almost gone berserk and was defying gravity. Eventually it came down to earth with a bang, and we are all suffering the consequences. The unthinkable happened, and banks and mortgage companies began to fail, including some that were household names who had been considered to be almost invincible.

Please Click Here to visit the Free Mortgage Advice Web Site.

The domino effect didn't just affect the US economy but had major repercussions all over the world. Other countries had jumped on the bandwagon, some more than others but the global effect has only narrowly avoided catastrophe.

Many countries are now joining together in an endeavor to make the best of a bad thing. It has been made more difficult by happening at the latter stages of a presidential campaign. President Elect Obama has successfully sought high office at a very difficult time. The world will be watching and wishing him well.