High-Risk Instruments

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August 31, 2024 5 min read Definitions

Subprime Lending: Provision of Loans to Borrowers with Poor Credit Rating

Finance Banking Subprime Lending Financial Crisis Loans Credit Rating High-Risk Instruments

Subprime Lending refers to the provision of loans, particularly home loans, to borrowers with a poor credit rating. These loans are considered high risk and therefore come with higher borrowing costs. Reckless subprime lending was a significant factor in the financial crisis of 2007-2008.

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