As Short-Term Interest Rates Began to Rise in 2005, Which

question 122

Multiple Choice

As short-term interest rates began to rise in 2005, which one of the following mortgage loan categories experienced the largest increase in default and foreclosure rates?

• A) Fixed rate mortgages to prime borrowers.
• B) Fixed rate mortgages to sub-prime borrowers.
• C) Adjustable rate mortgages extended to both prime and sub-prime borrowers.
• D) Adjustable rate mortgages to sub-prime borrowers only; the default and foreclosure rates of these loans extended to prime borrowers declined.