The credit crisis related to the mortgage problem in 2008 has been one of the massive financial issues of the world since the times of the Great Depression. The consequences of the credit crisis can still be seen in the modern world, where people have the ability to cope with their financial problems for a short period of time. This is the area of life that affected mortgage selling and purchasing. Other aspects of life were also affected because this sphere concerns almost every person.
The credit crisis started when banks of the United States mentioned that the number of credits went down, and people began to borrow less money for their needs. As banking systems of different countries are connected, the financial problem of 2008 started to spread at a high rate (D’Acunto & Rossi, 2016). It became difficult for people to buy new houses as owners believed that the real value of their properties was higher. Consequently, the demand from the buyers was high, but supply was going down due to financial issues around the world. The economic crisis in 2008 has also caused uncertainty in the bond market. Originally, the bond market is responsible for long- and short-term borrowings of actual paper money or cheques from organizations. The rare of the bond market does not change during the stable time of economics. However, during the credit crisis at the beginning of the twenty-first century, the borrowings have slowed down.
Understanding the bond market is a crucial part that should be undertaken by any business’s manager or individual entrepreneur. The bond market might not directly relate to individuals who are not associated with any business activity. However, they still might feel the changes in the rate of borrowing from banks of the organization while being ordinary workers who do not usually take top positions in companies (Amiraslani et al., 2017). When the number of borrowings started to go down due to the useless and lack of supply, the bond market began losing its stability which had been constructed for many years.
The current situation with COVID-19 pandemics made people uncertain about the future as some aspects of life cannot be influenced by one individual. Modern society has learned to look at previous experiences of their ancestors and build their future by staying aware of potential problems that might arise. According to Aussenegg et al. (2016), it took many years to restore the previous rate of the bond market and increase the turnover of money in the mortgage sphere. During the pandemic, the borrowings for properties became more stable, and professionals managed to adjust the experience to avoid potential causes of different crises (Gray et al., 2019). The best strategies to maintain the level of the bond market might be analyses of specific conclusions from the past and understanding what may happen in the next five years. When all negative aspects are detected, the financial crisis might have a minimal influence on such spheres as mortgages and prevent the development of credit problems in the world.
In conclusion, it might become difficult for governments to control all aspects of human life, and in this case, such problems as a financial crisis arise. One of the massive is the credit crisis in 2008, and many individuals still might mention its effects on their daily lives. The fight against this global issue was complicated. However, these days people are more aware of the causes of financial troubles, and they have a chance to look back at the previous experience and apply it to protect the future.
References
Amiraslani, H., Lins, K. V. & Servaes, H. (2017). A Matter of Trust? The Bond Market benefits of Corporate Social Capital During the Financial Crisis. CEPR Discussion Paper, DP12321, 1-55.
Aussenegg, W., Gotz, L. & Jelic, R. (2016). European asset swap spreads and the credit crisis. The European Journal of Finance, 22(7).
D’Acunto, F. & Rossi, A. G. (2016). Regressive Mortgage Credit Redistribution in the Post-crisis Era. Robert H. Smith School Research Paper, 2833961, 1-64.
Gray, D. F., Merton, R. C. & Bodie Z. (2019). A Contingent Claims Analysis of the Subprime Credit Crisis of 2007-2008. World Scientific Reference on Contingent Claims Analysis in Corporate Finance, 321-377.