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 - One-hundredth of 1% Is inflation good for the economy? - Yes, a small amount of 2% is healthy How can the BoE reduce inflation? -