Subprime: meaning, definitions and examples
๐ฆ
subprime
[ sสbหpraษชm ]
finance term
Subprime refers to loans or financial products that are offered to borrowers with poor credit histories or low credit scores. These loans typically come with higher interest rates compared to prime loans, reflecting the increased risk to lenders. Subprime lending played a significant role in the financial crisis of 2007-2008, as many borrowers defaulted on their loans. The term can also extend to any risky asset that is deemed less likely to be repaid.
Synonyms
high-risk, non-prime, risky.
Examples of usage
- The subprime mortgage crisis led to significant financial instability.
- Many borrowers were offered subprime loans that they could not afford.
- Investors were wary of subprime bonds after the market crash.
Translations
Translations of the word "subprime" in other languages:
๐ต๐น subprime
๐ฎ๐ณ เคธเคฌเคชเฅเคฐเคพเคเคฎ
๐ฉ๐ช Subprime
๐ฎ๐ฉ subprime
๐บ๐ฆ ััะฑะฟัะฐะนะผ
๐ต๐ฑ subprime
๐ฏ๐ต ใตใใใฉใคใ
๐ซ๐ท subprime
๐ช๐ธ subprime
๐น๐ท subprime
๐ฐ๐ท ์๋ธํ๋ผ์
๐ธ๐ฆ ุณุงุจ ุจุฑุงูู
๐จ๐ฟ subprime
๐ธ๐ฐ subprime
๐จ๐ณ ๆฌก็บง่ดทๆฌพ
๐ธ๐ฎ subprime
๐ฎ๐ธ subprime
๐ฐ๐ฟ ััะฑะฟัะฐะนะผ
๐ฌ๐ช แกแแแแ แแแ
๐ฆ๐ฟ subprime
๐ฒ๐ฝ subprime
Etymology
The term subprime originated in the 1970s as a way to categorize borrowers who had poor credit scores. Prior to the widespread use of subprime lending, most loans were classified into 'prime' and 'subprime' categories. The subprime sector expanded in the 1990s and early 2000s, coinciding with a boom in the housing market and an influx of mortgage-backed securities. Financial institutions began actively marketing subprime loans to attract borrowers who would otherwise not qualify for traditional loans. However, the aggressive lending practices and the subsequent rise in default rates ultimately exposed the vulnerabilities in the subprime mortgage market, leading to the catastrophic financial crisis of 2007-2008. This period highlighted the risks associated with subprime lending and sparked reforms in lending practices and regulations.