The Fannie Mae And Freddie Mac Takeover

“WHAT WILL THE GOVERNMENT TAKEOVER OF FANNIE MAE AND FREDDIE MAC MEAN TO THE AVERAGE BORROWER OR PROSPECTIVE HOMEBUYER?”

The government’s takeover of mortgage giants Fannie Mae and Freddie Mac may not directly affect you if, for example, you currently have a fixed-rate mortgage and don’t plan on refinancing or buying a home anytime soon, but in looking at the big picture, two things are becoming clear. First, the government takeover will provide stability and bring confidence to the market. For the investors who drive the mortgage market, the takeover means that buying Fannie or Freddie-issued debt is now much less of a risk. Taken together, Fannie Mae and Freddie Mac own or guarantee 46 percent of all outstanding home mortgages in the U.S.—and now having 46 percent of mortgage debt backed up by the government will certainly shore up the mortgage market. Second, conforming mortgage rates should definitely benefit from the Fannie and Freddie takeover. Following the news of the takeover in early September, interest rates have hovered around the 6.0 percent mark. However, this doesn’t necessarily mean interest rates are in a freefall. The window for opportunity won’t be open forever, so if you’re looking to buy or refinance, it’s a wise move to lock in at a low rate as soon as possible. ∆