The sharp fall in home price in the U.S. appeared to have been a surprise for home speculators and also for some mortgage investors. The delinquency rates on mortgages rose to unprecedented levels, as seen in Figure 11.3. The large increase in foreclosures and short sales, following the fall of home prices, resulted in mortgage losses to banks and other financial investors. However, such losses were not confined only to the domestic U.S. financial markets. Instead, financial markets across the world were affected by the U.S. mortgage problems.