Subprime borrowers didn't cause the subprime crisis
September 10, 2017 10:02 AM Subscribe
Multiple groups of academics have come to the same conclusion: Borrowers in the middle and top of the distribution are the ones that contributed most significantly to the increase in mortgages in default after 2007. During the whole time period, even at the height of the housing boom, sub-prime was never more than 20% of the market. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse. ... It was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.