News
US Government intervention ‘better than stamp duty cut’
8 September 2008
This weekend, the US Government announced that it is taking over Freddie Mac and Fannie Mae, two of the largest Mortgage Lenders in the US. President George Bush said the two Mortgage Lenders posed "an unacceptable risk" to the economy, prompting a £100bn capital injection. Between them, Freddie Mac and Fannie Mae finance or guarantee nearly half of the outstanding mortgages in the US.
Robin King, movewithus founding director, believes that this may be the turning point for the housing market in the UK.
Robin King said: "The issues around the housing markets and the looming recession have been caused because of a complete breakdown in confidence between banks and particularly because of their exposure to sub-prime lending in the US mortgage market. The US Government stepping in has meant that all of the questionable lending to half of the US market is underwritten, meaning that loans have a value to investors who buy them for their annuity value."
"In terms of scale, this is the largest investment in the mortgage market ever made. Although its full impact is yet to be seen, this single act may be a turning point in the world liquidity problem which may in turn change the outlook for the UK housing market. This is better news than the cut in stamp duty as it gets to the very heart of the problem and makes cash available to businesses and home buyers."
Source
http://www.movewithus.co.uk/00,news,55026,185,00.htm (launches a new window)
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