As a consequence of the foreclosure process, lenders suffered losses which led to reduced
financial assets and hence lending capabilities. At the same time interest rates were rising,
making mortgages even more expensive. This exacerbated the situation for existing mortgage
owners seeking a new mortgage whose low interest introductory period was about to finish.
As the rate of foreclosures increased, the ability and willingness of lenders to offer mortgages
in this market decreased, creating a downward spiral of foreclosures.