US Mortgage Bailout Good News for Investors?
The recent news of that the US government is taking over control of the country’s two largest mortgage companies, the Federal National Mortgage Association (better known as Fannie Mae) and the Federal Home Loan Mortgage Association (Freddy Mac) is being seen by many as positive news for the general worldwide investment climate.
On 8 September the US Treasury Secretary, Henry Paulson, announced that the government would be placing the two agencies under "conservatorship", which is closely related to bankruptcy protection.
The two entities were created to provide liquidity to offer affordable mortgage loans to Americans. Over time Fannie Mae and Freddy Mac both grew in importance and now it is estimated that combined, the two corporations own or have guaranteed about 50% of the United States' US$12 trillion home loan market. However, both entities were caught up in the sub-prime loan debacle and have seen their share values plummet to levels which now bring into question their ability to cover the losses on the mortgages they hold.
Keith Shaughnessy, a mortgage market insider, believes that the move by the government will aid the suffering housing and credit sector. He states, "The government seizure of Fannie Mae and Freddie Mac will restore credibility to the mortgage market and encourage investors..."
James Gonzalez, Obelisk's Market Analyst, agrees, "The incertitude created by the sub-prime loan affair in the US and its after effects, have had detrimental consequences for money markets around the globe. Hopefully this move will be the first step in helping investors turn the corner and return some confidence to the international credit market."
If the intervention does re-kindle confidence in the American mortgage market, it could have the effect of lowering interest rates and relaxing credit worldwide. This, in turn, would spark investment and thereby increase the number of investment opportunities available. Every canny investor should pay close attention to this developing story, no matter where they reside.
For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk free on 0808 160 0670 (UK) or 1800 932 514 (IRE).
Email: info@obeliskinternational.com or visit our website: http://www.obeliskinternational.com.
For press enquires, please contact Obelisk’s marketing department on (+34) 952 820 319 or email press@obeliskinternational.com.
On 8 September the US Treasury Secretary, Henry Paulson, announced that the government would be placing the two agencies under "conservatorship", which is closely related to bankruptcy protection.
The two entities were created to provide liquidity to offer affordable mortgage loans to Americans. Over time Fannie Mae and Freddy Mac both grew in importance and now it is estimated that combined, the two corporations own or have guaranteed about 50% of the United States' US$12 trillion home loan market. However, both entities were caught up in the sub-prime loan debacle and have seen their share values plummet to levels which now bring into question their ability to cover the losses on the mortgages they hold.
Keith Shaughnessy, a mortgage market insider, believes that the move by the government will aid the suffering housing and credit sector. He states, "The government seizure of Fannie Mae and Freddie Mac will restore credibility to the mortgage market and encourage investors..."
James Gonzalez, Obelisk's Market Analyst, agrees, "The incertitude created by the sub-prime loan affair in the US and its after effects, have had detrimental consequences for money markets around the globe. Hopefully this move will be the first step in helping investors turn the corner and return some confidence to the international credit market."
If the intervention does re-kindle confidence in the American mortgage market, it could have the effect of lowering interest rates and relaxing credit worldwide. This, in turn, would spark investment and thereby increase the number of investment opportunities available. Every canny investor should pay close attention to this developing story, no matter where they reside.
For more information on overseas property investment and to find out about Obelisk's latest projects, contact Obelisk free on 0808 160 0670 (UK) or 1800 932 514 (IRE).
Email: info@obeliskinternational.com or visit our website: http://www.obeliskinternational.com.
For press enquires, please contact Obelisk’s marketing department on (+34) 952 820 319 or email press@obeliskinternational.com.
Labels: investment, mortgage, obelisk, US
posted by Owen Thomas at 10:48 am
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