Before the Great Recession, lax requirements to get a mortgage resulted in mass defaults that left nearly 19 million homes vacant.

Subprime lending practices, which fueled the housing bubble, surged after 2000.

Watch Margot Robbie explain subprime mortgages—risky loans given to homebuyers with low credit scores or no income verification.

To continue selling mortgages, agencies that determine how risky a loan is gave high ratings to homebuyers regardless of their actual risk portfolio.

To avoid a total collapse of the housing market, the US government took control of the two leading mortgage companies, Fannie Mae and Freddie Mac.

Pioneered by JP Morgan, credit default swaps are a form of financial derivatives that act as insurance policies for banks issuing assets created with risky loans.

In 2024, 74% of homebuyers took out a mortgage

Debt owed on mortgages made up about 70% of US consumer debt as of 2025. Mortgage collateral ensures the lender isn’t at a complete loss if the borrower defaults. Under most mortgage contracts, the property is considered collateral under the loan. This means that if a borrower doesn’t repay the loan, then the lender can seize their property.

US homeownership rates declined from the start of the Great Recession through 2016.

Mortgages evolved from exclusive agreements for the wealthy into a key part of homeownership today

The word "mortgage" comes from medieval French, meaning "death contract"—but the modern American mortgage has a more recent and complicated history. This explainer looks at how mortgages evolved from exclusive agreements for the wealthy into a key part of homeownership today, including the impacts of New Deal policies, redlining, and the Fair Housing Act.

Buyers used to borrow money from people within their communities to purchase property

Historically, borrowing money from other people to purchase property was common until private financing companies—primarily building and loan associations—stepped in to offer mortgages to buyers.

Securitization has become common practice in home financing

When a homebuyer finances with a lender, they aren’t necessarily the one footing the bill. After a buyer secures a home loan, the lender can sell the loan to another financial institution or a private institution. That group can later sell that mortgage to investors. This is called securitization.

Borrowers were increasingly defaulting on private credit loans as of early 2026

Risks in private credit investing include the industry's lack of transparency and the ability of businesses to borrow more than a bank might allow against their debt. Some borrowers in early 2026, for instance, likely did not expect interest rates to be so high for so long, which could be contributing to an uptick in defaults.

For much of human history, homeownership was primarily associated with the elite

Before the Industrial Revolution, early mortgages were rather exclusive loans given only to nobility. But as more people gained more wealth through the Industrial Revolution, banks began to take on “higher-risk” loans to everyday people.

Refinancing a mortgage is when a homeowner exchanges their current loan for a new one

Homeowners typically refinance to secure a lower interest rate and potentially a new loan term length. Debt owed on mortgages made up about 70% of US consumer debt as of 2025.

The 2008 financial system unraveled in a wave of speculation

Michael Lewis—author of the bestselling "The Big Short"—explains how a wave of speculation (among other factors) drove the 2008 collapse, from lenders issuing risky mortgages to Wall Street turning them into fragile securities. He also highlights the few outsiders who recognized the bubble and bet against it before the crash.

In 2008, the 'Big Short' mastermind Michael Burry made more than $700M.

Mortgages are loans used to buy property

A mortgage is a loan used to buy property, like a house. Borrowers typically put down a percentage of the cost of the home, and the amount left over is financed through a lender, like a bank.

Cheap debt and relatively minimal regulation fueled private equity's expansion

Low interest rates in the 2010s made taking on debt cheap, making leveraged buyouts incredibly lucrative. Private equity firms were able to make large deals quickly, in part because they don't face the same disclosure requirements and shareholder approval processes as public companies. These two factors juiced the growth of private funds.

In March 2008, Bear Stearns was the first major bank to collapse in the Great Recession—leading to panic across the entire global financial system.

The movie adaptation of ‘The Big Short’ provided a visual for the 2008 housing bubble

A scene from "The Big Short" visualizes how Wall Street bundled shaky mortgages into complex housing bonds and sold credit default swaps on top of them—showing, step by step, how the structure of the 2008 housing bubble was vulnerable to collapse.

The rare, so-called 'assumable' mortgage is landing homebuyers a 3% rate

High interest rates in a competitive market are part of the reason some buyers struggle to close on homes. But this rare mortgage can help. Assumable mortgages allow buyers to take over the original mortgage from the seller, giving them a much lower interest rate.

Modern payday lending came about in the late 1990s

In the early 1900s, unlicensed "salary lenders" used to give consumers one-week loans at annualized percentage rates of more than 100%. But wage garnishment and financially abusive practices led some states to create special licenses for lenders and implement rate caps to protect consumers. In the 1990s, a series of deregulations in various states opened the door for the modern payday lending industry to take off.

Listen to an account of a community bank that was taken over by the FDIC in the Great Recession.

Commonly referred to as the 'bank bailout,' the Troubled Asset Relief Program disbursed $443B in an attempt to keep the financial system solvent.

‘The Giant Pool of Money’ remains one of the most acclaimed accounts of the 2008 housing bubble

This Peabody Award–winning "This American Life" episode traces how cheap global money, subprime lending, and Wall Street engineering inflated the housing bubble. Through vivid reporting and real voices, it became one of the defining works of 2000s financial journalism.

Consequences of a bad credit score

A bad credit score can lead to spending roughly $100K more on a typical mortgage. Poor scores also prevent you from getting certain jobs, apartments, and more, hindering you from building wealth in the long term.

Getting prequalified or preapproved for a loan is typically step one in securing a home loan

While prequalification and preapprovals give buyers an idea of the type of loan offer they might expect, the prequalification process is much more straightforward than getting preapproved. However, some real estate agents require buyers to get preapproved, and some sellers may take a buyer's offer more seriously.

Alternative investments have become more popular since the 2008 financial crisis

When the traditional markets crashed during the 2008 financial crisis, many people saw the value of their traditional investments plummet and began to look into alternatives as a result.

More than $2.6B has been laundered through US real estate in the past 20 years

All cash real estate transactions don't require extensive background and identity checks, creating a loophole for criminals who would otherwise be flagged for suspicious behavior to clean large amounts of money with one purchase. Real estate prices are easily manipulated and can be used to generate more income by renting the space, making it an attractive and common tool for money laundering.

Private mortgage insurance protects the lender rather than the borrower

Also known as a “PMI,” private mortgage insurance may be required for those who have a conventional loan and put less than 20% down on their home. A PMI could also be required for someone refinancing their mortgage if they have less than 20% equity remaining in the property.

Find out ways to get lower rates on private loans, such as applying with a cosigner

More borrowers are being pushed to opt for private student loans as changes to federal borrowing caps and repayment plans are implemented. Private lenders typically advertise interest rates that fall anywhere between sub-3% and 15% or higher.

Read about why bans on short selling are a controversial policy

Generally, short selling is legal, but regulations often restrict short positions when a stock has experienced a sharp price decline (more than 10% in one day). However, negative feedback loops in times of financial crisis have given short selling a bad reputation. The government has temporarily banned short selling during previous market downturns—like The Great Recession of 2008 and the early months of the COVID-19 pandemic—but experts argue whether those bans actually improved market stability or just distorted prices.

Some argue that credit reporting promotes economic inequality in the US

Although today's credit scoring system is much more objective than, say, the credit assessment system of the 1700s, some argue there's still room for improvement, with critics saying the current system is still discriminatory. For example, while mortgage payments have long been automatically reported to credit bureaus, rent payments (the primary housing expense for most lower-income Americans) historically haven't been reported unless a payment was missed.

'Good deflation' happens when prices naturally track with supply, meaning prices change gradually

This tends to make products and services more affordable and normalizes the standard of living. Bad deflation usually happens when there are sudden changes to either supply or demand. Near-zero [interest rates helped create the real estate bubble that sparked the Great Recession when it crashed](https://www.youtube.com/watch?v=LMo9mD8j7IA&t=91s) Because deflation distorts the value of money, deflation is particularly harmful for borrowers. Low interest rates made it easy for businesses and everyday people to take on enormous debt, which exacerbated the effects of the recession.

Construction of small, affordable starter homes has decreased 75% since the 1970s

Rising costs aren’t the only thing stopping first-time homebuyers from buying real estate—only 9% of recent new construction is for starter homes. The majority of new housing construction focuses on higher-end buyers due to the increased cost of land, labor, and resources.

American International Group, one of the largest insurance companies in the world, received $182B from the federal government—the largest of any bailout in the wake of the Great Recession.

Title loans are a type of short-term loan with high interest rates

Title loans allow borrowers to use their vehicle's title as collateral for a short-term loan. Similar to payday loans, title loans often have high interest rates and are mostly structured to last around 30 days. If title loans aren't repaid, the lender can take possession of the borrower's vehicle.

How student loans became incredibly prevalent

As of 2024, the total outstanding federal student loan debt sat at $1.6T, held by almost 43 million borrowers. Explore the history of student loans and how they became prevalent in the US, as told by several influential actors in the creation of the program over the years.

What is quantitative easing?

Quantitative easing was a relatively new method the Federal Reserve used to curb deflation during the Great Recession. In this process, a central bank digitally creates money that is used to purchase assets, usually government bonds. This lowers returns on low-risk bonds, encouraging investors to put their money in high-risk, short-term stocks, and moves money through the system.

Why Americans keep buying McMansions

Some argue that McMansions—large, relatively newly built, amenity-filled, cookie-cutter homes—are ugly. Others say they're just not a good investment. And yet Americans continue buying them. This video explores why McMansions are still popular despite these criticisms, and how these homes got their start in the first place. Watch the video here.

BNPL has 19th-century roots, but the pandemic made it mainstream

The modern BNPL model didn't take off until the COVID-19 pandemic, when consumers were stuck at home and lockdowns forced them to shop online rather than in person. The number of US BNPL loans grew more than tenfold from 2019 (16.8 million) to 2021 (180 million), according to a Consumer Financial Protection Bureau report.

The shadow banking system is a group of intermediaries that operate outside of normal banking regulations

The nonbank financial intermediaries that make up the shadow banking system legally provide services that are similar to those of traditional commercial banks. Although the term isn't used as often as it once was, private credit firms are technically part of the shadow banking system, as are hedge funds, payday lenders, buy now, pay later companies, and more.

30-year fixed mortgage rates have changed significantly over time

In the 1980s, 30-year fixed mortgage rates peaked just under 17%. During the COVID-19 pandemic, they were much lower, hovering around 3%.

China has a ‘ghost town of abandoned mansions’

This video shows how China’s property bubble deflated as new-home sales collapsed and more than 50 developers defaulted. In Shenyang, an abandoned “ghost town” reveals the fallout of a boom built on debt and overbuilding that could no longer be sustained.

The 1929 stock market crash is a defining example of a financial bubble burst

Fueled by margin speculation and intense optimism, stock prices soared to unsustainable levels before collapsing in late October—erasing billions in market value within days.

Near-universal banking masks a large underbanked shadow system

FDIC data indicates 128 million households have a checking account, the vast majority (96% in 2024). But more than 14% of households are underbanked, meaning they have accounts but also rely on nonbank services such as check cashing, payday loans, or prepaid cards.

Congress banned banks from paying checking account interest for 80 years

Known as "Regulation Q," the act sought to stop bank competition for customers involving increasing interest rates in the 1930s. This competition led banks to make reckless investment decisions to pay higher interest rates. During the ban, banks competed by focusing on convenience (ATMs, branches), relying on fees, and building relationships.

Roughly 10% of US apartments were owned by private equity firms as of 2025

Almost half of those apartments were purchased after 2021. However, local community groups across the country are experimenting with ways to put residential and commercial real estate in the hands of community members.

Many retail investors exited the stock market after 2008, leading to a drop in individual market participation

That changed thanks to GameStop, federal stimulus checks, and strong corporate results in the first quarter of 2021. This chart plots how much retail investors poured into the market each day, reaching records in early 2023.

The 2024 Synapse collapse took $90M of people’s life savings with it

In 2024, a banking middleman called Synapse declared bankruptcy. Unfortunately, it also locked roughly 100,000 Americans out of their own money, which prompted a class action lawsuit.

Are credit unions living up to DEI promises?

Credit union insiders often say their institutions better serve minority bankers through a combination of a not-for-profit ethos and community focus. However, a recent probe found that the largest US credit union rejected more than half of all Black applicants for conventional mortgages. To dive deep into Navy Federal Credit Union’s mortgage practices, read this journalistic investigation.