Subprime Crisis: A Timeline

The subprime crisis primarily refers to the problems in America's subprime mortgage market, which consists of loans to individuals with weak credit histories (which often leads to a higher risk of default). It is an ongoing financial crisis which impact has yet to be fully discovered, but for the most part, it has caused significant turmoil over the past year.

2001: Beginning of housing bubble. The Federal Reserve (Fed) lowers interest rates 11 times on the back of the dot.com bust and 9/11.

2004: Fed attempts to combat inflation. 16 consecutive interest rate hikes follow the first on 30th June 2004 - affecting American borrowers.

2005-2006: Property bubble begins to unwind. House prices begin to fall, accompanied by increasing defaults on subprime mortgages.

March 2007: Landmark problems begin. New Century Financial, the second largest subprime lender, stops lending, and its shares are suspended.

April 2007: New Century Financial files for bankruptcy. Not the first of subprime lenders to take this path, but the most high-profile victim of the crisis till then.

October 2007: Merrill Lynch announces US$7.9 billion writedown. After announcing a worst-case scenario US$7 billion hit due to the falling prices of mortgage-backed investments just a month before, ML surprises the street.

November 2007: Other bulge bracket banks take a hit. Morgan Stanley announces a USD3.7 billion writedown due to its mortgage-related exposure. Citigroup announces a writedown of USD8 to 11 billion.