Economic tough times test limits of subprime loans Search by ticker symbol, abbreviation or company name Ticker Abrv. The economic slowdown, as mild as it appears, will be the first stress test of subprime mortgage lending.
Subprime loans carry higher rates.
As many as one-third of all subprime borrowers could get cheaper loans at traditional banks, according to an estimate by the Federal Home Loan Mortgage Corporation. Subprime mortgage lending expanded during the second half of the 1990s. The loans come mainly from finance companies and mortgage banks for borrowers with credit problems. Before the business got started, these people might not have gotten a mortgage at all. Or they might not have qualified for a large enough loan to buy the house they wanted.