What mortgage category gave its name to a major cause of the 2007-2008 financial crisis?

The mortgage category that gave its name to a major cause of the 2007–2008 financial crisis was subprime mortgages.

“Subprime” describes loans made to borrowers with weaker credit histories or higher perceived default risk. These mortgages often carried higher interest rates, adjustable payments, limited documentation, or other features that made them harder to repay when housing conditions changed.

During the U.S. housing boom, lenders issued large numbers of subprime loans, and financial firms bundled many mortgages into mortgage-backed securities and collateralized debt obligations. When home prices stopped rising and adjustable rates reset higher, defaults and foreclosures increased. The resulting losses spread through banks and global credit markets.

A common mix-up is treating subprime mortgages as the entire cause of the crisis. They were a central trigger and label, but excessive leverage, weak underwriting, risky securitization, inaccurate ratings, speculation, and regulatory failures also magnified the damage. The crisis became especially acute after Bear Stearns collapsed in 2008 and Lehman Brothers filed for bankruptcy in September of that year.