ERM Glossary: Sub-Prime Mortgage

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Sub-prime refers to loans (e.g. mortgages) to borrowers typically having weakened credit histories. These might include payment delinquencies and potentially more severe problems such as adverse court judgements and bankruptcies. Such loans may also display reduced repayment capacity as measured by credit scores, high debt-to-income ratios, or other criteria indicating heightened risk of default.


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