What is typically a characteristic of subprime mortgages?

Subprime mortgages are characterized by higher interest rates due to the increased credit risk associated with the borrowers. These loans are often extended to individuals with lower credit scores or insufficient credit history, which makes lenders perceive a greater risk of default. To compensate for this higher risk, lenders charge higher interest rates on subprime mortgages compared to conventional loans. This pricing strategy reflects the lender's need to protect against potential defaults by generating additional revenue from the higher interest payments over the life of the loan.

In contrast, other characteristics that do not align with subprime mortgages include having lower interest rates than conventional loans, not requiring any down payment, or providing a guarantee of loan approval. Conventional loans typically offer lower rates to borrowers with good credit, down payment requirements can vary across loan types but are often more stringent for subprime loans, and lenders typically assess risk carefully before granting approval, making guaranteed loan approval unlikely for subprime applicants.