Cemap 2 Topic 1

Cemap 2 Topic 1 What factors hampered the recovery of the property market following 07-09 financial crisis? - ✔✔Recession, banks wasn't lending What are the contributing factors that make it difficult for first time buyers? - ✔✔stringent affordability test, larger deposits, higher house prices When interest rates are low for a prolonged period of time what is likely to happen to property prices? - ✔✔Rise Interest rates on mortgage loans are closely linked to which interbank lending rate? - ✔✔3 month LIBOR Inflation can be reduced by reducing interest rates. True or false? - ✔✔False What % of a building society total lending must be related to residential mortgages? - 25% - 50% - 75% -90% - ✔✔75? What is meant by securitised lending? - ✔✔Bundle many mortgage loans and selling them to another business Sub prime lending is? - ✔✔Lending to someone who has a poor credit history Sub prime lending is always classified as irresponsible. True or false? - ✔✔False How was the market stimulated in the 07-09 financial crisis? - ✔✔Bank rate cut to 0.5% What was the funding for lending scheme introduced by BoE following financial crisis? - ✔✔BoE lends money to financial institutions at below market rates What does Recession mean? - ✔✔Decline in GDP (value of all goods and services) for 2 successive quarters 6 months List some factors that affect the mortgage market - ✔✔- Interest rates - Inflation - Economy - Supply/Demand - Government action Define; LIBOR, Bank Rate, Basis Point - ✔✔- Rate at which banks lend to eachother - Rate at which BoE lends to financial institutions