Assetz® News » HOME | RSS Feed FEED | LIST ALL ARTICLES | ASSETZ HOMEPAGE
Investment Property News from Assetz

Assetz® Property News Service

New moves may boost US property market

4th December 2008 | back to article listings BACK    print this article PRINT

It may be imagined that not many people are looking for a new property in the US just now. After all, Americans are also facing a recession, the housing market itself was the epicentre of the credit crunch and even if new president Barack Obama really does have all the big ideas needed to stimulate recovery, he still doesn't actually take office until next month.

Of course, there are some to whom this does not apply, such as those with enough money to invest in top end property as a cash purchaser. This week reports have suggested Madonna is looking for a mansion in New York, at a price that may be as much as $60 million (£41 million). Such figures may be beyond the imagination of most investors, but there may yet be good news on the horizon.

One reported possibility is that the US Treasury will use Fannie Mae and Freddie Mac - which were subject to a de facto part-privatisation in the autumn - to lower mortgage rates by around one per cent. By reducing these to 4.5 per cent, it is hoped this will encourage more borrowers and in turn halt the fall in house prices.

Should such a move occur, it may indeed help stabilise the market, in much the same way rate cuts in Britain - like today's one per cent drop - may potentially encourage more buyers should the banks pass them on. Of course, Britain has no Fannie Mae and Freddie Mac, but the underlying principle is the same - drop the price and sell more, sell more and the value rises.

Evidence that this may work has come in the shape of data suggesting such a trend is already beginning to take place.

The Mortgage Bankers Association has reported that lower mortgage rates - such as the drop in average 30-year fixed rates from 5.99 per cent to 5.47 per cent last week - has led to a dramatic rise in mortgage applications. These have jumped by 112 per cent in that time, with 203 per cent more people trying to refinance.

USA Today claimed that the fall in mortgage rates had been driven by action already announced by the Treasury concerning Fannie Mae, Freddie Mac and Ginnie Mae, involving the buying up of $100 billion of mortgages and $500 billion of mortgage-backed securities. One intended effect of this was those lower rates.

So while Britain and the eurozone cut their rates and the Federal Reserve may yet do so again this month, it appears that the US may just be in a position to encourage a revival of lending and borrowing. This may only be the start, but investors in property may be watching very closely to see how matters unfold.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4523.html. Alternatively, please see our full press release archive.

Assetz® is a UK and International Property Investment Specialist. Please visit our property sites shown below.

Assetz for Investors UK Assetz Hotels Assetz Homes Assetz International Assetz France Assetz Spain Assetz Cyprus Assetz Germany Assetz Portugal Assetz Ski Assetz Cape Verde Assetz USA Assetz Finance Assetz Fund Management

Accessing the news service

You can view all of the Assetz® UK, International and UK Property Investment Articles and News here.

We also provide an RSS Feed Feed of the news service, or you can view all articles. Click here to view more information on RSS readers and how they make reading online news more convenient.

eXTReMe Tracker