Cause of Market Crash of 2008

So, what caused the collapse? The main culprit was the subprime lending market. When this market crashed, a large amount of companies faced foreclosure. Even the companies that did not foreclose suffered losses that amounted to billions of dollars. You may have already heard about the subprime market crash. If you are like most, however, you may not know what the crash meant to individual property owners. You may even have questions regarding how we got in this situation to begin with. Over the past few years, subprime mortgages were the biggest trend in real estate lending. Buyers who were unable to qualify for conventional mortgages could obtain financing via a subprime mortgage. People who obtained these loans often had to pay high interest rates. Lenders obtained the money to pay for these mortgages from a variety of sources. Many companies secured loans at low interest rates and then loaned that money out to buyers at a higher rate. Some of the money was borrowed from central banks. While the housing market remained relatively stable, the ill consequences of these loans could not be seen clearly. In fact, the market was experiencing a surge in value that was unprecedented.