Sub-Prime Mortgage Collapse Affects Financial World
The results of the current credit crisis continue to unveil. The problem began with the huge number of Americans unable to pay their escalating mortgages. The US sub-prime mortgage sector subsequently fell out, and when it emerged that many major financial institutions would suffer from having purchased these sub-prime mortgages, banks got stingy with their lending practices.
With increased lending rates, consumers now are feeling the heat of the credit crisis throughout the world. According to the Daily Telegraph, credit card companies (and even admittedly Goldfish) are attempting to protect themselves by reducing the amount of money their customers can borrow, regardless of the customer’s credit history.
If the stock market is an indication of the current situation, it’s quite gloomy. Citigroup, who has been intimately involved with and impacted by the sub-prime mortgage fiasco, reported a shares loss of 6% on November 19th. In addition, London’s FTSE experienced its largest drop since August. With forecasts indicating the light at the end of the tunnel cannot yet be seen, more trouble is sure to emerge for investors and consumers.