[Jackmc1047]

The problem wasn't so much that people took/were given loans they couldn't afford. Default rates fell for many years along with lending standards (not requiring a job, assets, or income for a loan became common). Continuous rapidly rising home prices kept defaults low. Believing home prices would always rise (at some minimum rate) made it rational for borrowers and lenders engage in this behavior.

To argue they were being irrational, you'd have to show that it was irrational for them to believe in the myth that this trend would never end, which is tantamount to expecting markets to not experience manias or bubbles.