A subprime mortgage is a type of home loan that is offered to borrowers with a lower credit score or a history of financial difficulties. These borrowers are considered to be at a higher risk of defaulting on their mortgage payments. Subprime mortgages often come with higher interest rates and less favorable terms compared to prime mortgages offered to borrowers with good credit.

In the Boston real estate market, the risks associated with subprime mortgages can be significant. Here are some key risks:

1. Higher foreclosure rates: Subprime borrowers are more likely to default on their mortgage payments, leading to higher foreclosure rates. This can result in an increase in distressed properties and a decline in property values.
2. Market instability: A large number of subprime mortgages in the Boston real estate market can create market instability. If a significant number of borrowers default on their loans, it can have a ripple effect on the overall market, leading to decreased demand and increased inventory.
3. Impact on neighborhoods: Foreclosed properties can have a negative impact on neighborhoods. They often require maintenance and can become vacant, leading to decreased property values and an overall decline in the desirability of the area.
4. Tightened lending standards: After the 2008 financial crisis, stricter lending standards were implemented to mitigate the risks associated with subprime mortgages. This has made it harder for borrowers with lower credit scores to obtain financing, which can limit the pool of potential buyers and slow down the real estate market.

It's important to note that the risks associated with subprime mortgages can vary depending on the overall health of the economy and the specific conditions of the Boston real estate market. However, it is generally advisable for borrowers to carefully consider their financial situation and explore all available mortgage options before opting for a subprime mortgage.

References:

• Investopedia - Subprime Mortgage
• Federal Reserve Bank of Boston - Subprime Mortgages