1. Causes of the subprime mortgage crisis:

With the cooling of the U.S. housing market, especially the increase in short-term interest rates, subprime mortgage repayment interest rates have also risen sharply, and home buyers’ loan repayments have The burden is greatly increased. At the same time, the continued cooling of the housing market has made it difficult for homebuyers to sell their homes or refinance their mortgages.

This situation directly caused a large number of subprime borrowers to be unable to repay their loans on time. Banks repossessed their houses but could not sell them at high prices, resulting in large-scale losses and triggering the subprime mortgage crisis.

2. Impact of the subprime mortgage crisis:

Since the full outbreak of the subprime mortgage crisis in August 2007, it has caused great impact and damage to the international financial order, causing financial markets to A strong credit tightening effect was produced, and the systemic financial risks accumulated over a long period of time in the international financial system were exposed. The financial crisis caused by the subprime mortgage crisis is the most serious financial crisis in the United States since the "Great Depression" in the 1930s.

The subprime mortgage crisis that originated in the United States is spreading across the world. The global financial system has been significantly affected, and the crisis has impacted the real economy. China was also affected by the subprime mortgage crisis.

Excessive innovation of financial instruments, distorted interests of credit rating agencies, and deregulation of monetary policy are the main causes of the U.S. subprime mortgage crisis. Although the response measures taken by the U.S. government such as substantial capital injections, consecutive interest rate cuts, and direct intervention have achieved certain results, they have not fundamentally solved the problem. Extended information

The U.S. subprime mortgage crisis is also called the subprime mortgage crisis, also translated as the subprime debt crisis. It refers to a financial crisis that occurred in the United States due to the bankruptcy of subprime mortgage lenders, the forced closure of investment funds, and violent stock market fluctuations. It caused an illiquidity crisis in major financial markets around the world. The "subprime mortgage crisis" in the United States began to gradually emerge in the spring of 2006. In August 2007, it began to sweep through the world's major financial markets such as the United States, the European Union, and Japan. The subprime mortgage crisis has become a hot issue internationally.

The apparent direct cause of the storm in the U.S. subprime mortgage market is the rise in U.S. interest rates and the continued cooling of the housing market. The rise in interest rates has led to increased repayment pressure. Many users with poor credit feel that repayment pressure is high, and there is a possibility of default. The crisis that affects the recovery of bank loans has also had a serious impact on many countries around the world, including China. Some scholars pointed out that "the United States, which technically should have gone bankrupt long ago, owes too much debt to other countries in the world, and the creditor countries do not want to see the United States go bankrupt. Not only can they not abandon US national debt, they must even continue to subscribe for more U.S. debt to ensure the U.S. does not go bankrupt.”

Due to the high house prices in the past, banks believe that even if the loan is given to a subprime borrower, if the borrower is unable to repay the loan, the mortgaged house can be used to repay the loan, and the bank loan can be recovered after auction or sale. However, due to the sudden drop in house prices and the borrower's inability to repay, the bank sold the house, but found that the funds obtained could not make up for the loan + interest at that time, or even the loan amount itself, so the bank would suffer a loss on this loan.

It’s fine if one or two borrowers have such a problem, but due to the rising interest rates on installment payments and the fact that these borrowers themselves are subprime credit lenders, this has resulted in a large number of people who are unable to repay their loans. Borrower. As mentioned above, banks repossessed houses but could not sell them at high prices, resulting in large losses and triggering the subprime mortgage crisis.

Reference: Baidu Encyclopedia - US Subprime Mortgage Crisis