Mortgage loans are long-term financial agreements where a borrower receives funds secured by real estate property. These loans typically have terms ranging from 15 to 30 years and are repaid with monthly installments that include principal and interest. Secured loans, a broader category, involve collateral such as vehicles, equipment, or real estate, which the lender can seize if the borrower defaults. Both loan types prioritize asset-backed repayment, reducing lender risk and often lowering interest rates compared to unsecured alternatives.

The significance of mortgage loans and secured loans lies in their role in enabling large investments while mitigating lender risk. For instance, in 2023, approximately 68% of U.S. mortgages were conventional loans (non-government-backed), with an average interest rate of 6.92% for a 30-year fixed-rate mortgage, per the Federal Housing Finance Agency (FHFA). Secured loans, including auto loans and equipment financing, benefit from lower default rates due to collateral. Auto loans, for example, had a 90-day+ delinquency rate of 2.5% in Q3 2023, significantly below the 15.4% delinquency rate for unsecured credit card balances, as reported by the Federal Reserve. Collateral reduces lender exposure, enabling competitive pricing. Additionally, government-backed mortgages (e.g., FHA loans) account for 40% of originations, with lower rates (5.67% in 2023) due to federal guarantees, further illustrating the risk-reward dynamic. These data underscore how secured structures balance accessibility with financial stability, fostering economic activity while protecting lenders.