US housing slowdown and subprime distress

Conditions at the time

Rising housing prices and expanded lending to high-risk borrowers coincided with growth in securitization markets.

How events unfolded

After housing prices peaked, refinancing and sales became difficult, and New Century went bankrupt in 2007/4.

Stakeholders and impacts

Loss risks were distributed across mortgage borrowers, lenders, securities investors and guarantee institutions.

Information available at the time

As distress grew, mortgage-security downgrades and subprime-lender closures followed.

Findings confirmed later

Reduced lending and falling prices demonstrated mutually reinforcing deterioration in housing demand and collateral values.

Alternative interpretations and limitations

2006–2007 covers initial deterioration; the subprime crisis described in official material extends more broadly through 2007–2010.

Interpretation using later sources

Rising prices had allowed borrowers to sell or refinance. Falling prices and reduced lending narrowed those exits. Fed historical material describes housing stabilization and recovery as subsequent developments in 2012–2013. ASSETCASTING interpretation: Examine troubled loans alongside lenders' funding. The endpoint of this early deterioration period is not the recovery date for housing demand, foreclosures or construction.

Evidence coverage through 2013-11-22 · Sources checked 2026-10-14

• Subprime Mortgage Crisis ↗

Related events and periods1

• Trade and credit expansion with accumulating financial imbalances →

  An event or period whose recorded start falls within this editorial interval. This does not establish that it caused or represents the characteristics of the era, nor guarantee that the entire period falls within the interval.