Mortgage market
The mortgage market is a part of the financial market in which mortgages are traded . In recent years, this has increasingly happened in a structured, bundled form. Trading in so-called subprime loans for homeowners with poor credit ratings was the starting point for the financial crisis from 2007 .
The mortgage market plays a particularly important role in the USA and Great Britain , as owning a home is important for social security . Laws such as the "fair housing act" as part of the Civil Rights Act of 1968 should allow marginalized groups in the USA to have access to their own homes so as not to disadvantage them.
The idea of grouping mortgages in larger packages should on the one hand serve these political goals and simplify mortgage trading, but on the other hand also promised higher returns . In large part, the loans secured by home ownership were borrowing but as consumer loans , which in times of a prosperous real estate market was also politically desirable because the US consumer for two-thirds of the local gross domestic product is responsible.
Eventually, with the collapse of the US mortgage market, a. on the nationalization of Fannie Mae and Freddie Mac and in September 2008, the largest bank failure in US history, on the collapse of Washington Mutual .
With the emergence of a real estate bubble in the USA, riskier repayment methods increasingly came to the fore. Such were / are
- Variable rate mortgages ( adjustable rate mortgages , ARM): These the debtor pays in the first years of a lower interest rate , which at the expected increase in value of a property makes sense. These ARMs were the most common form of repayment modalities in 2005 with 37 percent
- Interest-only loans with debt repayment at the end of the term
- Negative-Amortization Loans with lower interest rates and a corresponding increase in the debt burden.