The subprime mortgage crisis occurred from 2007 to 2010 after the collapse of the U.S. housing market. When the housing bubble burst, many borrowers were unable to pay back their loans. The dramatic increase in foreclosures caused many financial institutions to collapse. Many required a bailout from the government.

The subprime meltdown was the sharp increase in high-risk mortgages that went into default beginning in 2007, contributing to the most severe recession in decades. The housing boom of the mid-2000s—combined with low-interest rates at the time—prompted many lenders to offer home loans to individuals with poor credit.

Subprime Loans and the Global Financial Crisis The theory was that even if some borrowers defaulted on their loans, most would continue to make their payments, so the investors' money was relatively safe. However, when unexpectedly large numbers of borrowers defaulted, that all fell apart.

sub·​prime ˈsəb-ˌprīm. 1. : having or being an interest rate that is higher than a prime rate and is extended chiefly to a borrower who has a poor credit rating or is judged to be a potentially high risk for default (as due to low income)