US mortgage bail-out welcomed

The US government takeover of mortgage giants Fannie Mae and Freddie Mac has been welcomed by British experts, who believe the move will inject some confidence into the UK housing market.


The Bush administration is aiming to avert the potential for major financial turmoil by taking control of the two institutions. It was feared that their bankruptcy could have triggered an economic collapse.

Between them, Fannie and Freddie have lost $14 billion (£8 billion) in the past year and are likely to pile up billions more in losses until the housing market begins to recover.

British mortgage specialists said the takeover could mean a boost in confidence for UK lenders, leading to the greater availability of mortgages.

Ray Boulger of mortgage broker John Charcol said: "I'm not suggesting we are going to see an immediate improvement (in the UK housing market). But there's no question it is a positive move.

"The UK market is so intertwined with the US, it will also help the UK."

Together the companies own or guarantee about five trillion dollars in home loans, about half the nation's total. The move has already had a positive effect on world-wide stock markets.

Copyright © PA Business 2008

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