The US Treasury is looking at a plan to use the two new government entities, Fannie Mae and Freddie Mac to drive mortgage rates lower so banks will offer loans for 4.5%. That’s down about a point to a point and a quarter from where we are today. That’s a significant drop.
Here’s the story from the Wall Street Journal. Â The idea is in the discussion phase between the Treasury department and the outgoing Bush Administration and the incoming Obama Administration.
Government officials are desperate to try to put in a floor on housing prices. I don’t blame them. Once housing is fixed..or rather the hemorrhaging is stopped, then the overall economy can start to recover.