The increase in the share of loans extended to borrowers with little or no down payment contributed to the financial crisis of 2008 because these loans
A) initially depressed housing prices.
B) were extended only to borrowers with prime credit status.
C) had much higher default rates than loans to borrowers making larger down payments.
D) were unavailable to low-income borrowers, who would have profited the most from such loans.

Question

Quizplus · Accepted Answer

These loans, often referred to as subprime mortgages, were riskier and had higher default rates, contributing to the financial crisis when many borrowers were unable to repay them.

The Increase in the Share of Loans Extended to Borrowers