Housing Market Tracker - Subprime Sinks Prime Mortgage Market
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housing market, Prime Mortgage, subprime March 14th, 2008Subprime Fallout
The Next Shoe To Drop In Housing. “The credit crunch has finally hit the traditional mortgage market. Investors are now shunning mortgage-backed securities issued by government sponsored enterprises Fannie Mae (FNM) and Freddie Mac (FRE), which have been critical in keeping the real estate market from completely falling apart… As the prices of mortgage-backed securities have fallen, their yields have risen, leading to higher mortgage rates. The national average rate on a 30-year fixed-rate mortgage was 5.96% on Thursday, up from about 5.90% a week earlier, according to Bankrate.com. A borrower looking for a 5-year adjustable-rate mortgage would pay 5.71% today, up from 5.03% a week ago.” (CNN Money, Mar. 13th)
Chief Says Freddie Won’t Raise Capital. “Freddie Mac, the giant mortgage-funding company, [said] it won’t compromise the interests of its shareholders to increase its capacity to help the troubled housing market by buying or guaranteeing mortgages… Freddie: While Freddie Mac may be government chartered, it is also a public company. It is perennially torn by competing demands, such as keeping mortgage markets healthy, promoting homeownership for low-income families and generating profit for its shareholders. At an investor/analyst briefing… CEO Richard F. Syron cited management’s fiduciary responsibilities in suggesting that Freddie will put shareholders first and resist pressure to raise more capital.” (Washington Post, Mar. 13th)
Tags: housing market, Prime Mortgage, subprime
