The fact is that subprime mortgage loans went along to all sorts of individuals, just people with impaired credit
The worldwide crisis is considered having came from the united states subprime mortgage industry. This column argues a large number of the most used factors you to definitely are noticed toward subprime drama try, in order to a giant the amount, mythology.
Yuliya Demyanyk
Subprime mortgage loans have obtained a great amount of attract in the us since 2000, when the number of subprime money being originated and refinanced try right up easily. The attention intensified into the 2007, whenever defaults to the subprime loans started to increase leading to that which was understood during the time given that subprime drama (Felton and you can Reinhart, 2008). Researchers, policymakers, and societal used to identify the factors from inside the subprime trend one caused the fresh new implosion of your own sector and eventually the global financial system. Sadly, probably the most popular causes having came up toward subprime drama was, to help you a giant the quantity, myths. With the personal evaluation, the fresh new reasons offered aren’t supported by empirical search (Demyanyk and Van Hemert 2008; Demyanyk 2009a, 2009b).
This new myth one to subprime fund ran in order to individuals with crappy borrowing from the bank is inspired by ignoring the brand new complexity of your own subprime financial industry while the undeniable fact that subprime mortgages was defined inside lots regarding ways besides by borrowing top-notch consumers.