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Sub-prime
"Sub-prime" refers to mortgage loans which were granted (particularly in the US, but also in the UK) to borrowers of less than stellar creditworthiness, generally with very high Loan-To-Value ratios (sometimes even exceeding 100%), and in many cases on the basis of these applicants' unchallenged declarations. When the US and UK real estate market started heading south in 2007, a large percentage of sub-prime mortgage loans went in arrears, which triggered defaults on the subordinated tranches of the ABS issued to refinance them. In turn this forced banks to massive write offs and recapitalisation exercises.
Sub-prime
"Sub-prime" refers to mortgage loans which were granted (particularly in the US, but also in the UK) to borrowers of less than stellar creditworthiness, generally with very high Loan-To-Value ratios (sometimes even exceeding 100%), and in many cases on the basis of these applicants' unchallenged declarations. When the US and UK real estate market started heading south in 2007, a large percentage of sub-prime mortgage loans went in arrears, which triggered defaults on the subordinated tranches of the ABS issued to refinance them. In turn this forced banks to massive write offs and recapitalisation exercises.
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Definition of Sub-prime - Finance dictionary
