Housing Bubble
this term describes an unstable and rapid growth in home prices driven by speculation
What is a housing bubble?
A monetary contract that can be traded, such as as stock, bonds, etc
What are financial instruments?
Allowed buyers to purchase homes with little or no down payment
What is lax lending/zero down mortgages?
An increase in housing prices driven by high demand and low supply
What is the housing market boom?
The financial instrument transferred risk by allowing investors to insure against default.
What is a credit default swap (CDS)?
A loan from a lender to a borrower used to purchase real estate.
What are mortgages?
Loans that were given to borrower with poor credit and contributed to the crisis
What are subprime mortgages?
Complex products were created by pooling together different mortgage backed securities
What are collateralized debt obligations (CDOs)
When millions of borrowers failed to repay their loans, this happened to banks balance sheets
What is they became overloaded with bad debt?
An event in 2008 where a major bank collapsed tied to subprime mortgages.
What was the Lehman brothers collapse?
What is GDP?
This economic downturn followed when the bubble burst
What is the Great Recession?