The following figure, from the Federal Reserve Monetary Policy Report to the Congress (July 21, 2009), shows
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The following figure, from the Federal Reserve Monetary Policy Report to the Congress (July 21, 2009), shows mortgage delinquency rates from 2001 to 2009 in the United States.
a) Explain why mortgage delinquency rates were higher for subprime mortgages.
b) Explain why adjustable rate mortgages experienced higher delinquency rates.
Transcribed Image Text:
Percent Percent 40 30 20 10 0 2001 12 9 CO 6 3 T 0 2001 2003 Adjustable rate 2003 Subprime 2005 Prime and near prime Fixed rate Adjustable rate 2005 2007 2007 Fixed rate 2009 2009
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