The Sub-prime Mortgage Market and Variable Rate Mortgage Market in the Essay

The Sub-prime Mortgage Market and Variable Rate Mortgage Market in the USA - Essay Example The subprime mortgage market can be considered as an extension of this lending practice prevalent in the housing market. Subprime mortgage loans carry interest rates much higher than the prime loans in order to cover the additional risk exposure of the lenders in extending credit to the borrowers who are considered to have a bad loan track and defaulters in repayments. With the increase in the subprime lending the rate of failures has also considerably increased, as most of the loans have been granted to those who did not have the adequate means to repay the loans. When such failures have reached a greater proportion, "Investors have started scrutinizing subprime loans more carefully and, in turn, lenders have tightened underwriting standard". Certain other measures including credit spreads over subprime securitizations have also been undertaken to control the rate of delinquencies. Different aspects of the subprime mortgage including the variable rate mortgage are discussed in the following sections of the report. The report also details the process of securitization being adopted by the mortgage originators to fund the growth in their mortgage lending. 2.0 What is Subprime Mortgage Although the term 'subprime mortgage' is used to indicate the loans offered to those borrowers whose credibility is doubtful, the term "subprime' does not signify the character of the loan itself but characterizes the borrower meaning the borrower has a substandard credit status. Lack of good credit history and habitual defaults in repayments make the borrowers to get into the status of sub prime borrowers. Subprime lending can take a variety of instruments like... As the report declares the subprime mortgage market can be considered as an extension of this lending practice prevalent in the housing market. Subprime mortgage loans carry interest rates much higher than the prime loans in order to cover the additional risk exposure of the lenders in extending credit to the borrowers who are considered to have a bad loan track and defaulters in repayments. With the increase in the subprime lending the rate of failures has also considerably increased, as most of the loans have been granted to those who did not have the adequate means to repay the loans. When such failures have reached a greater proportion, â€Å"Investors have started scrutinizing subprime loans more carefully and, in turn, lenders have tightened underwriting standard†. This paper stresses that lack of good credit history and habitual defaults in repayments make the borrowers to get into the status of sub prime borrowers. Subprime lending can take a variety of instruments like subprime mortgages, car loans and credit cards. The expansion in the sub-prime mortgage has made the home-ownership possible for those borrowers who otherwise would not be able to qualify for any borrowing. There has been a sharp increase in the subprime mortgage in the recent years. With the increase in the subprime mortgage market, the concerns over the adverse effects of the predatory loans have also increased.

Analysis of Whole Foods Inc Essay Example | Topics and Well Written Essays - 2500 words

Analysis of Whole Foods Inc - Essay Example Analyses used in this study are Five Forces, Life Cycle Assessment, Value Chain Analysis, SWOT, PEST, and 7S. Buyer power- Whole Foods faces a weak buyer power because buyers are fragmented and do not have the particular influence on product or price. Organic food is sold in different 14,500 supermarkets in the States, so buyers do not have a single power to be able to dictate their price on the retailers. But if we consider Whole Foods to be the buyer, then we can consider this company to have a very strong buyer power because it can purchase and command a price from direct suppliers, and can buy out the competition.   A threat of new entrants. The threat of new entrants to the industry is low because of the big amount of investment needed to compete in the industry. The average capital cost of opening a food market site amounted to $15.1 million in 2007, plus the inventory cost of $ 850,000. Whole Foods Market pre-opening expenses averaged $2.6 million for the 21 stores they have opened. It is doubtful whether the products of the small manufacturers can reach the same shelves as with Whole Foods.   A threat of substitutes. There is a low threat of substitute because of the growing concern of people on wellness products. Whole Foods succeeded in building a competitive advantage. Their prices are comparatively higher than conventional foods, but they have established a niche in the industry because of the perceived needs of costumers.   A threat of rivalry - There is a high degree of rivalry in the industry because of the emergence of competitors in the industry. The rivalry is intense because competitors like Fresh & Easy Neighborhood, Sunflower Farmers Market. Traders Joe and Fresh Market offered several competitive moves. Competitors applied innovations, features, and lower pricing, For instance, Fresh Market developed small markets with the feel and atmosphere of an open European style market.