Log in
HomeClass Notes1,200,000CA670,000

ADMS 1010 Lecture : Week 10 - Confederation Life and RBC

82 views4 pages
School
York University
Department
Administrative Studies
Course
ADMS 1010
Professor
Yong Troy

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

After the dot-com bubble burst in the early 21st century, interest rates were kept extremely low to encourage investment. Financial service companies, now able to merge and offer a diversity of products, saw opportunity. Readily available credit made it easy for people to buy homes. People who previously could not afford a home of their own rushed to do so. This influx of consumers, driven by easy credit, drove up housing prices. Others, seeing the value of their homes going up, saw this as a buffer to debt and started to spend money in other areas, buoyed by an inflated financial worth. A proper regulatory regime could have prevented such risky behaviour. Most decision makers did not recognize the risk that was being placed on financial markets because of this lack of oversight. This was in part based on the assumption that home prices would not fall dramatically.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

EC223 Lecture Notes - Lecture 8: Subprime Lending, Fico, The Conference Board
ambermosquito135
RSM220H1 Chapter Notes -United States Code, Historical Cost, Bear Stearns
blushelk273
ECON 2D03 Lecture Notes - Lecture 5: Affordable Housing, Lease, Subprime Mortgage Crisis
periwinklemole911

Related Questions

The Consumer Financial Protection Bureau was created with the oversight authority necessary to ensure that

consumer financial markets work.

the prices and risks for credit products and other consumer financial services are easy to understand.

the prices and risks for mortgages, credit cards, and other kinds of financial products and services are clear.

All of these.

TRUE OR FALSE

A subprime mortgage is a mortgage with an APR below the prime rate.

11.Financial aspects of rent or buy decision for housing is often dominated by which of these factors. (A) housing prices -and mortgage interest rates (B) Tax write-offs (C) expected change in values (D) All of the above

12.A couple starting out may have to wait several years to accumulate a 20% down payment, but there are federal programs often offered through ________ ___________, which can help them. A) Shadow Banks B) Investment banks C) Angel banks D) FHA & the VA

15.Homeowners buy homes with an expectation of acquiring equity, if housing prices decline they may find themselves actually upside-_______ with the market value of their home less than the amount they owe on the mortgage. A) bankrupt, B) red lined C) down D) broke

16.Negative ________________ means the amount of home equity is decreasing instead of increasing. A) appreciation, B) amortization, C) disequilibrium, D) equity

17.With an interest only mortgage ______________________ payments will occur later in the loan. A) lower B)equal C) higher D) variable

18.A 30 year ______ mortgage, is useful to consumers who want to safely build equity, without the threat of ethically usurious interest rates charged in most ARMs sold to the public in the recent past, if the homeowner can refrain from using the equity in the home as a piggy bank, then there is a good chance of retiring with the full equity of the home. A) Buy downs B) Fixed C)Reverse D) All of the above

19.The author cautions us to beware of dishonest _____________________ providers that charge exorbitant fees. A) Subprime mortgage B) Home equity loan C) Reverse mortgage

20.ARMs with a _______________ on the monthly payment can result in negative amortization.

Which of the following contributed to the soaring housing prices during 2002-2004?

a. Regulations designed to make housing more affordable increased the demand for housing and drove housing prices upward.

b. Regulations designed to make housing more affordable decreased the number of sub-prime loans and made home buying a safer investment.

c. Mortgage lending standards tightened, and therefore mortgage loans for housing were only available to buyers purchasing highly expensive homes.

d. Home buyers were required to make larger down payments and this increased the demand for housing, driving housing prices up.