| A Credit Crunch Defined |
| by The Crunch | |
| Sunday, 27 January 2008 | |
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A credit crunch occurs when there is a sudden reduction in the availability of credit, this may be due to an increased perception of risk or a change in worldwide monetary conditions. The sub-prime mortgage sector in America was to blame for their current crisis. There was a lending frenzy to fixed income households as property prices soared in years leading up to 2006. It wasn't long before home owners started defaulting on their payments and foreclosure proceedings began. Some of the biggest lenders have written down loses totalling billions of dollars. There are widespread fears of a recession in the US which could spread globally. Watch the above video for a timeline of events.            |