The collapse of the American sub-prime market, with all its attendant woes, both to borrowers and lenders, really hit home yesterday.

The European Central Bank, regulator of the Eurozone group of countries, piled into the markets with $130 billion of cheap, emergency credit.

In what was the biggest central bank intervention since 9/11, the ECB move came after reports that commercial lenders were desperately hauling back the supply of loans.

French giant BNP Paribas suspended withdrawals from three of its investment funds because of their exposure to the U.S. sub-prime market, saying “There has been a complete evaporation of liquidity” from credit markets, which could escalate into a worldwide credit squeeze.

Rumours were rife of impending fund meltdowns and banking collapses. Trevor Williams of Lloyds TSB said, “Liquidity has dried up basically. It’s a moment of panic.”

Nick Sparks, risk manager at F&C Partners, said, “People have got caught out. There will be more pain to come.”

For the first time in 16 years, U.S. house prices have fallen, raising fears over the economy. This could in turn have a knock-on effect on the rest of the world.

This doesn’t seem to be an isolated incident, as the UK Land Registry is reporting a long-expected fall in the British property market — a 1.1 percentage fall last month, bolstered only by buoyant figures for London.

Standard & Poor’s/Case Shiller Index reports that American values fell 1.4 percent in the first quarter compared with the same period last year. They were also down 0.7 percent on the final quarter of 2006.

The OECD (Organization for Economic Cooperation and Development) warned that the spillover effect could be “more pronounced than generally expected”.

If you’re planning on remodeling your house to raise its market value, you’re less likely to recoup the cost of the improvements than you were a few years ago.

The reason is basically that the cost for making home improvements has risen faster than the degree to which those improvements raise the resale value of a home.

Before you launch into a remodeling project at your home, read the advice at Remodeling Online. They have regional maps and data with charts detailing cost vs. value of specific remodeling projects for various regions of the country.

For instance, in Massachusetts you can expect to recoup 79% of the cost of a deck addition but in Oregon you will recoup 91.1% of the project’s cost.

The Mortgage Bankers Association is reporting that more homeowners are falling delinquent on their mortgage payments. According to their report, 4.7% of loan payments were more than 30 day past due and 11% of mortgages were in foreclosure.

The trend is being blamed on high-risk loans with subprime rates and adjustable rate mortgages that are being affected by rising interest rates over the past few years.

More Americans Making Late Mortgage Payments