U.S. subprime in the end what's the problem?.

<P>: Http://finance. News, the subprime mortgage market is stirring the U.S. economy and global financial markets nervous. .Since early 2007, the U.S. subprime mortgage market problems continue to emerge, has opened a new chapter in the housing market cooling, but the recent crisis spread further expansion and the emergence of signs. .U.S. sub-prime mortgage loans are for poor credit or lower income mortgage borrowers to achieve home ownership. .The market in the 20th century, the mid-90s to 2004, experienced rapid growth, from 1994 to 350 billion USD 140 billion U.S. dollars in 2000, and now may be up to 8,000 billion U.S. dollars. .During this period of prosperity thanks to the prevailing policy environment, easy credit, and the prevalence of asset securitization and other aspects. .</ P> <P> However, the issuance of subprime loans is based on rising house prices and low interest rates on the basis of assumptions. .Most subprime loans on a floating rate loan interest rate that changes with changes in short-term interest rates. .Once the prices come down interest rates, subprime borrowers will face a risk of inability to repay. .From the start of 2004, the Fed has to raise interest rates 17 times the benchmark interest rate from 1% to 5.25%, making the surge in borrower loan costs, far exceed the actual repayment capacity. .On the other hand, the past two years the U.S. housing market is gradually cooling, making homeowners refinancing more difficult. .This eventually led to the subprime mortgages since 2006, arrears, default and stop the rise in the number of mortgage foreclosure, and to the United States, including New Century Mortgage companies, including many lenders have withdrawn from the subprime mortgage market, to seek bankruptcy protection .or be acquired. .Meanwhile, investment in subprime mortgage securities and investment funds to the people involved in this storm and suffered huge losses, making the crisis appear to the global spread of the signs. .In short, the crisis subprime market largely reflects the system's flaws. .</ P> <P> the subprime crisis will be, directly or indirectly, to the U.S. consumer spending and negative impact on economic growth, and may spread to the relevant economic sectors, while the short term, is likely to intensify. .Subprime lending crisis is making more and more to re-enter the housing market, coupled with the market already exists a large number of unsold homes, may depress the overall price, so that further cooling the housing market. .The homeowners are also more difficult to meet through the refinancing of rising consumer demand, which is bound to weaken consumer spending, and then drag on U.S. economic growth. .According to Credit Suisse expects the subprime crisis may drag on U.S. economic growth in 2007, 0.5 percentage points. .</ P> <P> the biggest risk is that the subprime crisis, credit crunch, on the other capital markets and the spillover effects of the general rise in risk aversion. .But it does not necessarily threaten the prospects for a soft landing for the U.S. economy and lead to a recession. .Only the entire U.S. subprime mortgage market a small part (about 10%), only serious exposure to the subprime mortgage business and investment professionals suffer. .In addition, the pressure of the government and federal regulators, the lending spread of the situation to be curtailed. .</ P> <P>.