Recently, Joseph Yam talked about the second mortgage in China and Hong Kong on April 12th. He said, "The China and Hong Kong Mortgage Corporation Limited has a set of strict examination and approval criteria that focus on evaluating the actual repayment ability of borrowers. Therefore, even if home buyers only pay half of the property price instead of 3% as the down payment, the quality of such mortgage loans is still quite good. In other words, these mortgages with a loan amount of 95% are not subprime mortgages. The English word "sub-prime" of "sub-prime" describes the credit quality of the borrower, not the loan granted at a rate lower than the prime interest rate.
therefore, subprime mortgage refers to a group of people with poor credit records who are not eligible to borrow money for mortgage payment, but the bank grants mortgage loans to these people at a higher interest rate, about two percent higher, which is called subprime mortgage.
The origin of subprime mortgage (data from Bank of Communications):
"About 1995? Previously, American nationals? The main way to accumulate wealth? Through the stock market, but? City. The object of subprime lending is generally credit history? A poor group, so that they can "get on?" "Become the owner, and also provide? Pass? Opportunities for the city to create wealth. But there is no such thing as a free lunch, and subprime loans are exchanged? The reason is higher borrowing costs. Given the subprime mortgage? Repayments and bad debts? Both are high, so the interest rate will be correspondingly high. Some studies have pointed out that the bad debts of subprime loans? At least higher than the junior one? Times, and go? Default ratio? It is four times higher. Subprime mortgage, right? Sensitivity to change? It is also relatively low, so even in the low interest rate period, the "sub-owners" are also? Rong? Get low-interest loans.
The problem of subprime mortgage is not just a problem of lending to banks. Banks turn these mortgages into bonds and transfer some of the risks of subprime mortgage to bondholders, but this causes the following problems:
1) Most companies holding subprime bonds are hedge funds and private funds, which are also the source of hot money for global funds. If the subprime mortgage problem intensifies, these companies will have problems, which will cause global capital chaos and will also cause these companies to save themselves.
2) If the problem of subprime mortgage is more serious, if a large number of property owners fail to make mortgage payments and are repossessed, it will lead to a decline in the US property market and economic downturn, so that the original high-quality mortgage may also become subprime mortgage, which will have a wider and far-reaching impact, because many countries, including China, rely on the US market, which will lead to a global economic recession.
3) There is a crisis of confidence in the bond market. When the subprime bonds were issued, they were large institutions, so the credit rating was very high, not small A-level, or even AAA-level. However, many existing subprime mortgage bonds fell to junk rating, causing others to lose confidence in the bond market, making some companies in need of funds and some commercial banks issuing bonds lack of funds, thus causing other financial problems.
at present, there are problems in some companies, but they are only trivial problems, which only arouse some confidence problems. Many consortia and Europe and the United States have carried out fire-fighting operations, and it is still unknown whether they can put out the fire, so it is impossible to estimate the impact for the time being.
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