Subprime Mortgage Crisis in US

The economic instability and slowdown in US countries of 2007–2010 was a the result of subprime mortgage crisis stemmed from an earlier expansion of mortgage credit, including to borrowers who previously would have had difficulty getting mortgages, which both contributed to and was facilitated by rapidly rising home prices. The subprime mortgage crisis occurred when interest rates rose, home prices fell, and borrowers defaulted on loans. Its effect was the 2007 banking crisis, the 2008 financial crisis, and the Great Recession--the worst recession since the Great Depression. The major contribution of this crisis was due to the private lending sector. Nearly 84 percent of the sub-prime mortgages in 2006 were issued by private lending. While some high-risk families could obtain small-sized mortgages backed by the Federal Housing Administration (FHA), others, facing limited credit options, rented. In that era, homeownership fluctuated around 65 percent, mortgage foreclosure rates were low, and home construction and house prices mainly reflected swings in mortgage interest rates and income.