If you haven’t already heard, or maybe you could just care less, mortgage giants Fannie Mae and Freddie Mac where bailed out on Sunday by the federal government. Fannie and Freddie back close to 50% of all mortgages written in the United States. The government sponsored enterprises buy loans from banks and package them into mortgage backed securities.
The Sky is NOT falling
So what does this mean, besides taxpayers taking on the debt. Money just became cheaper, not exactly easier to get, two entirely different things. Rates did dive yesterday close to 1 full percent down into the 5.5% range which haven’t been seen in awhile. It’s hard to say if it was the market reacting but the rates did hold steady today.
Credit markets are still tight and will require some sort of down payment unless the down payment assistance programs make a comeback because they are no longer available as of Oct 1. There is one final push that is working it’s way through congress right now.
Interesting facts on the two companies are that they back close to five and a half trillion dollars of mortgage debt, that’s more than all privately held debt in the US. Currently they are involved in close to 80% of all mortgages written in the past year.
Although this is no quick fix for the problem, it just might make monthly payments more affordable for individuals/families because of the lower interest rates.
