Managing personal finance

For years, homeownership seemed like the safest investment you could wish for, even if it meant going deeply into debt by taking out a mortgage. This caused a practice called subprime mortgage lending to flourish in the US. "Subprime" means “far below the standard” and refers to the situation of a borrower with a poor credit rating. This person is not eligible for a traditional mortgage at a prime (or best possible) rate, and so must pay far more in interest. Anyone who takes out a mortgage under such conditions is putting himself at risk.  Now more and more Americans are losing their homes to foreclosure, as they default on their mortgage payments.

As subprime mortgages are resold on Wall Street, the mortgage crisis in the US is not only costing many families their livelihood, it now threatens the whole economy and has begun to hurt banks and markets around the world. The American Dialect Society has declared "subprime" the word of the year for 2007, and it is being used to describe any situation that seems threatening. Our exercise this week takes a look at expressions connected to managing personal finance.

Anne Hodgson