Subprime mortgage Meaning and Definition

3 months ago
InfoPlugMedia
3 minutes
Subprime Mortgage

Subprime Mortgage

Pronunciation

/ˈsʌbprɪm ˈmɔrɡɪdʒ/

Part of Speech

Noun

Definition

A type of mortgage in which the borrower’s creditworthiness is considered to be poor, and therefore the borrower is expected to default on the loan. Subprime mortgages often have high interest rates and fees.

Examples

  • The housing market was flooded with subprime mortgages during the financial crisis.
  • Many homeowners who took out subprime mortgages ended up defaulting on their loans.

Synonyms

  • High-risk mortgage
  • Alternative mortgage

Antonyms

  • Prime mortgage
  • Conforming loan

Additional Information

Subprime mortgages were a significant factor in the 2008 financial crisis, as many homeowners who took out these mortgages were unable to afford the large payments and defaulted on their loans. This led to a surge in foreclosures and a significant decrease in the value of housing assets. As a result, the term “subprime mortgage” is often associated with financial instability and risk.

Subprime mortgages are often used by borrowers who have poor credit or a limited credit history, and may be the only option available to them. However, they can be very expensive and come with many fees, making it difficult for borrowers to make their monthly payments.

Etymology

The term “subprime” originates from the Latin “sub,” meaning “below,” and “primus,” meaning “first.” It was first used in the financial industry in the 1990s to describe mortgages that were considered to be below investment grade.

Usage Notes

When using the term “subprime mortgage” in a sentence, it is important to understand that it refers to a specific type of mortgage and not a general term for all mortgages. Precaution should be taken when using the term, as it can be confusing to those who are not familiar with the financial industry.

Cultural References

  • The film “The Big Short” (2015) features a plotline surrounding subprime mortgages and their role in the financial crisis.
  • The TV show “Billions” (2016) has episodes that focus on the world of high finance and subprime mortgages.

Idiomatic Expressions or Phrases

  • High-risk loan
  • Borrowing beyond one’s means

Related Words or Phrases

  • Mortgage-backed security
  • Derivative
  • Credit rating

Collocations

  • Subprime mortgage crisis
  • Subprime lending
  • Subprime borrowers

Frequency of Use

Subprime mortgage is a term that was widely used during the 2008 financial crisis, but has since fallen out of favor. However, it is still used in the financial industry and in academic research to describe this type of mortgage.

Common Misspellings

  • Subprime Mortage
  • Sub-Prime Mortgage
  • Sub Prmie Mortgage

Related Words