Random thoughts with constructive ones come across very often to my mind, about business,finance,politics and economies. These thoughts form a very important part of my blog. Hope you enjoy reading them :)
Monday, January 07, 2008
How was year 2007 in terms of mortgages?
From the start of the year , 2007 was largely overshadowed by subprime mortgages in the United States.There were many people who were defualting the mortagages they took from banks unable to pay huge repayments plus the interest on the loan amounts.
Why did the American banking system come to this state? It was because when the interest rates were low , banks only concern was to give loans to as many people as possible to meet their monthly and yearly targets overlooking the main issue whether the person is financially fit to pay back the loan or not ,and the result n number of defaulters. Who is to be blamed ? I beleive it is the Banks or rather the people governing the banking system.
The situation got out of control even more when banks started giving loans to defaulters to help them pay back their loan further pushing them into debt levied with huge interest.
This has further weakened the global economic conditions, where banks are afraid to lend to each other , putting immense pressure on the central banks all over the world, forcing them to pump in billion of dollars , due to very low liquidity.
I know that this is going to continue in the year 2008 as well, the mortgage problem faced in the US has spread like wild fire all over the world and all the countries trading with America are direcly or indirectly effected.
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