Question

1) How did the subprime market crash affect the normal market for housing

2) Do you think the subprime loan mortgage program was a good idea and why

Answer 1

1) 2005 and 2006 saw the housing market crash back down to earth. Subprime mortgage lenders begin laying thousands of employees off. There was loss of jobs and income, and when people lose jobs, they won't make a long-term investment such as a home purchase. So, the market for housing was adversely affected.

2) No, it was not a good idea as it was characterized by higher interest rates, poor quality collateral, and less favorable terms in order to compensate for higher credit risk.