Economics

Hi, sorry about this late response, I just joined. Yes, you are correct. Sub prime is a loan for those who can't take out loans at the normal rate becuase of a low credit score. Becuase they have of lower a lower credit score, they have to take out sub prime loans, especially with mortgages. The issue with sub prime is the interest rate. Becuase the people have such a low score, lenders charge them high interest rates. around the time you asked your question, the housing market was suffering becuase people kept getting their houses siezed by the bank becuase they couldnt pay their mortgage. When this happened, more and more pressure was put on lenders, and sub prime lenders. The housing market in america play an extremely large part of GDP, which is the failures of the sub prime industry were so crippling. So yes, you are correct, it is going to affect trading, becuase they need to make up for the lost production. Hopefully this helped, it wouldve been perfect if I responding 5 months earlier.