Is the Subprime Mortgage Crisis Helping Third World Countries Develop?
Is the subprime mortgage crisis actually helping the economies of other less developed countries? According to this article, that may very well be the case. As we all know, the credit collapse in the Western World has brought our economy to a grinding halt, into what some might call a recession. As such, lenders who would be looking for business in the United States are looking to countries that would never have been a likely candidate in the past.
According to this article about the subprime mortgage lending crisis, the monetary losses that have and will result from the credit collapse are going to be astonishingly large. Countless Americans have been ousted from their properties, and this trend will no doubt continue for some time. The result has been that lending companies are looking elsewhere to create business.
Apparently, Africa is one such place that is benefiting from this trend. Although the African market is still a minuscule piece of the global pie, that chunk is rapidly growing. Ironically, lenders are running into some of the problems that we outlined on our page regarding how to improve your credit score. Many potential borrowers in Africa do not have a credit history, since they have been working on street corners or farms their entire life. “A tiny proportion of people have a bank account and an even tinier proportion have a product like a mortgage.”
The whole thing is a giant crap shoot. Given the complete dearth of information regarding African borrower’s credit histories, lenders have no idea about their potential to repay the loans. If they are too liberal and unrestrained in their lending, they may end up creating another subprime mortgage crisis in Africa, similar to the one we are currently experiencing in the United States.
