US subprime conditions set to worsen - Kroszner

"The bulk of the first interest rate resets for adjustable mortgages are yet to come," Kroszner said. "On average, from now until the end of 2008, nearly 450,000 subprime mortgages per quarter are scheduled to undergo their first reset, eventually causing a typical monthly payment to rise about $350, or 25%."

He added that weakness in house prices and the resulting limit on the build-up of home equity would hinder the ability of subprime borrowers to refinance out of their mortgages.

Kroszner

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