Subprime lending
This is called a credit rating; although covered by privacy laws, the information is readily available to people with a need to know (in some countries, loan applications specifically allow the lender to access such records).Because of this, it was possible for a loan made to a borrower with "prime" characteristics (e.g. high credit score, low debt) to be classified as subprime.Professor Harvey S. Rosen of Princeton University explained, "The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated against, the people without a lot of money in the bank to use for a down payment.[15] The sub-prime market did not take hold in Canada to the extent that it did in the U.S.,[16][17] where the vast majority of mortgages were originated by third parties and then packaged and sold to investors who often did not understand the associated risk.The inflated house-price bubble burst, property valuations plummeted and the real rate of return on investment could not be estimated, and so confidence in these instruments collapsed, and all less-than-prime mortgages were considered to be almost worthless toxic assets, regardless of their actual composition or performance.Markets with a high concentration of aggressive lending facilities are at risk of a sharper fall in real estate prices after a negative shock to demand.