WASHINGTON, May 4 (UPI) -- Risky lending practices have fueled a boom in the U.S. housing market that could turn into a bust, the Federal Deposit Insurance Corp. said.
The FDIC said home prices jumped at least 30 percent above the rate of inflation last year in an unprecedented 55 metropolitan areas -- all in California, Florida and the Northeast, the Washington Times reported.
"History clearly shows that housing booms don't last forever," said study authors and FDIC economists Cynthia Angell and Norman Williams. "The manner in which they end matters for mortgage lenders and borrowers alike."
Most previous housing booms have not ended in busts, which is defined as a drop of 15 percent or more in the price of houses.
However, the FDIC said risky lending practices that include easy credit, adjustable-rate mortgages and interest-only mortgages put borrowers, lenders and the FDIC at greater risk when the current hot demand for houses cools.
