THE SUB-PRIME CRISIS

I want to tell you about the subprime crisis because it is a very important financial crisis in the United States since 2006, and it affects the world since 2007. We can wonder what is the subprime crisis. To answer the question, we will studdy, in the first part, the reasons of the sub-prime crisis, and, in the second part, we will see the effects of the sub-prime crisis.

I)The reasons of sub-prime crisis

The sub-prime mortgage meltdown is a financial crisis, who exists, since 2006, in the United States because it was a crash of mortgage(hypothécaires) loans (prêts). This american crisis became a world crisis in february 2007. The sub-primes are dangerous credits, composed by mortgage (hypothécaire) loans, credit cards, car rents. In the United States, these credits are given to borrowers (emprunteurs) who do not qualify for market interest rates (taux) because of problems with their credit history or the inability to prove that they have enough income to support the monthly payment on the loan for which they are applying. The interests rates (taux d'intéret) are increased, because of the risks of the borrowers and their credit history. The repayment (remboursement) of the real estate (immobilier) borrow (emprunt) was limited by the interests payment. Then, the borrowers refund (rembourse) the capital (the money borrowed) before, when they sell their properties, two or three years later, with an appreciation, a profit, because of the real estate prices, which increased, until 2006. The interests rates of these credits were, for a majority, varied rates. Then, the american homeownership (accès à la propriété) rate increased from 64% in 1994 to a peak in 2004 with an all time high of 69,2%. This demand helped fuel housing price increases and consumer spending. Between 1997 and 2006, American home prices increased by 124%. But, since 2006, the real estate prices decreased in the United States. In fact, in november 2007, average