Between 2004-2006 interest rates were low and both Lenders and investors were looking for ways to make more money, then along came ‘Subprime Mortgages’. Borrowers classified as subprime are those with poor credit and most likely to default on their loans. Lenders charged them a higher rate of interest to compensate for the additional risk they took.

These became so popular that lenders started packaging the loans and sold them to investors, also known as Mortgage securitisation. When huge numbers in the Subprime market begun to default on their loans, lenders & financial institutions lost all the money invested leading to some filing for bankruptcy. Thus the 2008 Global Financial crisis was born.