US home foreclosures rose 68 per cent in November from a year earlier. The bad news is, they may go up even further in 2008, as adjustable-rate mortgages leave sub-prime borrowers unable to meet higher payments.

There were 201,950 foreclosure filings in November, including default notices, auction letters and bank repossessions, down 10 per cent from October. California, Florida and Ohio had the most filings and Nevada had the highest foreclosure rate.

California's 39,992 filings in November were more than double its total from a year earlier, but 21 per cent fewer than in October. Florida had 29,238 filings, more than triple last year's total, but down 3 per cent from October. Ohio had 16,308 filings, almost double the number a year ago and down 5.6 per cent from October.

Interest rates increased on more than $87 billion worth of sub-prime mortgages in the third quarter of 2007. Another $84 billion will be reset in the fourth quarter. Steeply falling home prices make it very difficult for borrowers to refinance into better loans, further compounding the problem.

Analysts expect foreclosures to surge next year, as payments rise on about 1 million home loans. Experts are even talking about 230,000 to 250,000 levels for monthly foreclosures in the first quarter.

Foreclosed properties are adding to the supply of unsold homes and deepening the US housing recession. Existing home sales will fall 12 per cent and home prices will drop at least 4.5 per cent next year, says Fannie Mae, the biggest US mortgage buyer. The inventory of unsold houses is at 11 months, an eight-year high.

The US Federal Reserve has proposed new rules to limit lending practices that have contributed to foreclosures, including a ban on low-documentation loans, limits on penalties for borrowers who prepay their debt and requiring lenders to determine whether borrowers can afford loans that reset to higher rates.

But the Fed proposals could inadvertently cause a short-term problem, say analysts, because they will bring in stringent loan standards that limit the opportunities for people who want to refinance. Already, mortgage applications in the US have fallen last week by the highest percentage since 2004. A jump in interest rates on home loans has caused purchases and refinancing to slow.

Falling prices mean homeowners owe more on their mortgages than the properties are worth. Under those circumstances, a lost job or a medical crisis can push people into foreclosure.

California, the most populous and most prosperous US state and the most expensive real estate market, had five cities whose foreclosure rate was among the top 10 in the nation. Stockton ranked first, with one filing for every 99 households, Modesto was second with one for every 104 households, and Merced was third with one for every 106 households. Vallejo-Fairfield ranked sixth and Riverside-San Bernardino was ninth.

The Las Vegas metropolitan area had the fourth-highest foreclosure rate, with one filing for every 122 households. Detroit was fifth with one for every 138 households. Greeley, Colorado, ranked seventh, Cape Coral-Fort Myers, Florida, was eighth and Miami was tenth. The national foreclosure rate was one for every 617 households.

Statewise, Nevada's foreclosure rate was the highest, was more than four times the national rate at one filing for every 152 households. Florida was second with one filing for every 282 households and Ohio was third with one for every 307 households.