FT.com / Capital markets - US mortgage problem fears spark sell-off

This may lead to higher interest rates for home loans.

Fears of further problems in the US mortgage industry and the broader economy flared on Tuesday, triggering a sell-off in credit markets as investors sought safe havens. Markets were rattled when Standard & Poor’s, the ratings agency, threatened to downgrade the credit ratings on some $12bn of bonds backed by US subprime home loans. This raised concerns of a broader repricing of risk in credit markets, leading to heavy losses for some investors, particularly in derivative markets.