ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -financial crisis of 2007–08, also called subprime mortgage crisis, severe contraction of liquidity in global financial markets that originated in the United States as a result of the collapse of the U.S. housing market.

Detailed explanation-2: -The Great Recession lasted from roughly 2007 to 2009 in the U.S., although the contagion spread around the world, affecting some economies longer. The root cause was excessive mortgage lending to borrowers who normally would not qualify for a home loan, which greatly increased risk to the lender.

Detailed explanation-3: -US house prices fell, borrowers missed repayments House prices in the United States peaked around mid 2006, coinciding with a rapidly rising supply of newly built houses in some areas. As house prices began to fall, the share of borrowers that failed to make their loan repayments began to rise.

Detailed explanation-4: -The Great Recession was a global economic downturn that devastated world financial markets as well as the banking and real estate industries.

Detailed explanation-5: -These risky loans, called subprime mortgages, would later become one of the main causes of the Great Recession. A subprime mortgage is a type of loan issued to borrowers with low credit ratings.