3.3 The Sustainability of Financial Products Flashcards
Sustainable financial product definition
One that is designed to meet the long-term requirements of those who buy it
How can a mortgage become an unsustainable product?
If too much money is lent to people who cannot afford to pay, on the basis of the value of he property
What is the sub-prime market?
People who could not afford mortgages but were lent them anyway
Why was lending loans to the sub-prime market unsustainable?
They had low incomes and were enticed with large discounts on the interest rate for a short period of time so when interest rates rose they could not afford it.
It is not sustainable to look at the sustainability of individual products in isolation - what is it also necessary to consider?
The sustainability of an individuals portfolio of products
What was the average age of first-time buyers in 2016/17?
33 years
Each person makes a personal decision on he saving-borrowing balance according to what?
- Income
- Personality
- Background
What should a saver do if they have over £85,000 to save?
Split it into different providers that are not in the same group to ensure all savings are covered by the FSCS
