Mortgage interest rates dropped in the early 2000s due to changes in how loans were structured and the types of borrowers. The popularity of adjustable rate mortgages with low initial rates played a big role in lowering average rates. Even after accounting for these factors, rates fell sharply in 2003 and rose again in 2006, especially for riskier Subprime mortgages. This shift in rates was linked to changes in the financial sector's ability to take on risk, affecting the supply of mortgage financing.