Mortgage: lower interest rates
November 26 2008 - The government on Tuesday said it will buy up to $100 billion in mortgages held by Fannie Mae and Freddie Mac and the Federal Home Loan Bank, and it will purchase up to $500 billion of mortgage securities backed by the housing giants and Ginnie Mae.
The goal: lower interest rates on loans for home buyers by directly buying mortgages.
What the move will mean for homeowners and the housing market is uncertain. While it is expected to reduce interest rates, it may not slow the galloping pace of foreclosures.
“The Fed’s idea has the potential to help the financial institutions, but the connection between doing that and helping homeowners isn’t clear,” says Ira Peppercorn, former deputy housing commissioner during the Clinton administration. “Freddie and Fannie provide liquidity in the marketplace. When they’re in trouble, it affects the entire housing system.”