|
A
mortgage of equipment is a financial product offered mainly in the
United Kingdom. It is composed of a loan of interest-only fixed
on a mortgage combined with an investment on the stock market. The
customer pays the interest on the capital, thus the money of economy
with regard to a loan of refunding usually; balance is invested
in the funds of equipment. In the pole of market stock of the Eighties
and the Nineties it seemed plausible that at the end of the limit
of loan, the investment would pay with far the capital and would
leave a surplus so that the customer spends.
However,
the rout of money market of the Nineties late proved that the mortgages
of equipment were a play: they were based on the stock markets increasing
more quickly than rates of bank credit, and thus transferred the
significant risk starting from the lenders with the borrowers.
The
sales with high pressure of the mortgages of equipment to people
who did not include/understand the risks that they took, or for
which the product was not very suitable, were reigned by the courses
in much case "put to sell", and much banks were forced to reconstitute
their customers with the financial position they in they would have
been left a mortgage refunding in the place.
|