According to traders of mortgage-backed securities, the slumping US housing market is about to get a lot worse, reports CNBC-TV18. Traders expect mortgage delinquencies and foreclosures to rise significantly.

Reports suggest that the slump in the US housing market is about to get worse. The ABX Index measures the risk of owning bonds backed by home-loans. The ABX Index rose 30% since August 9, to its highest since January. There are more than USD 500 billion of such notes outstanding.

Sales of new and existing homes are seen down 9.4% in 2006. The housing slowdown may cause Fed to lower rates to 4.5%.

Traders expect mortgage delinquencies and foreclosures to increase. The amount of bonds backed by subprime loans have more than doubled since 2001. More borrowers are finding it more hard to meet interest payments.