These funds have not only taken and traded high-risk mortgages, but have also leveraged themselves based on such assets. These operations crossed the Atlantic to include some of the major European banks. Back then, this contributed to considerably reducing interest rates, creating incentives to borrow. The supply of mortgage and real estate projects aimed to meet increasing housing needs thus multiplied in the US.
However, when interest rates began to rise, this easily accessible financing became non-existent, which affected the housing market. As the value of assets fell, loans, mostly floating-rate loans, not only became more expensive, but also lacked sufficient collateral.