Analysis of the Subprime Mortgage Crisis in the USA

By

[Name of the Author]

[Name of the Department]



ACKNOWLEDGEMENT

I would like to take this chance for thanking my research facilitator, friends and family for the support they provided me and their belief in me, as well as the guidance that they provided me, without which I would have never been able to do this research.



DECLARATION

I, (), would like to declare that all contents included in this dissertation stand for my individual work without any aid, and this dissertation has not been submitted for any examination at academic as well as professional level, previously. It is also representing my very own views and not essentially those that are associated with university.

Signed __________________ Date _________________

ACKNOWLEDGEMENTii

DECLARATIONiii

CHAPTER 1: INTRODUCTION1

Research Question2

Key Literature2

Reason for Choosing the Sources3

CHAPTER 2: BACKGROUND DISCUSSION4

CHAPTER 3: METHODOLOGY8

Overview of Qualitative and Quantitative Research Approaches8

Research Method and Design Appropriateness9

Data Collection Methods9

Secondary Research9

Primary Research10

Time Plan11

Gantt chart for Time Distribution11

REFERENCES13

CHAPTER 1: INTRODUCTION

Introduction

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant facts and figures relating to the subprime mortgage crisis in United States. In this paper, we will find different sources and analyze it with reference to the problem the source have, what points the source missed to discuss and the reason for choosing the source. The crisis in U.S. subprime mortgage market is fully revealed in mid-2007, although the signals indicating the crisis began to appear much earlier. Monetary policy easing cycle after the recession in the U.S. economy, the Fed began cutting interest rates from 6.5 percent, in mid-2000 to 1 percent, in June 2003, so low interest rates encourage borrowing, which both banks and credit institutions can easily afford (Barnett, 2009, pp.96). Since 1997 property prices in the U.S. continues to grow. Credit institutions completely ignored the basic principles of finance, grant loans to people who have no regular source of income, which must have sooner or later lead to a crisis. As a result of increased demand, real estate prices began to rise even faster. Due to the increasing cost of credit (the Fed since mid-2003 to June 2006, raised rates by 4.25 points. Percent) and unjustified increase in property prices, artificially inflated the American bubble began to burst. Clearly decreased both demand and property prices (Bogle, 2010, pp. 25).

Unfortunately, the credit institutions do not stop further development of its lending activities. More and more people began to have trouble repaying debt. Banks began to worry about real estate and offer them for sale, which due to the increased supply, decreased prices even more. In the period from early 2006 until mid-2007 real estate prices have dropped so much that the U.S. bubble finally burst, and the effects began to spread throughout the world.

Research Question

What is the impact of subprime mortgage crisis on the economy of America?

How far the subprime crisis has overcome, or how long it will last?

What long-term consequences can be expected?

What are the detailed outcomes of US subprime mortgage on the global economy?

The ...