It seemed too good to be true, a US government run system which helps its citizens buy their own homes without lending money or extending mortgages to the consumer, but instead buy the loans already existing with the banks thus raising the amount of money in the system. A system the UK could have looked to in admiration for its own fiscal needs.
But now the system has a glitch. An error which could cause repercussions for many in Britain’s finance market. As the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are in fear of collapse, which could devalue Britain’s leading companies by billions on Friday, there must be a fearless financier out there who can restore order to a dilemma brought about by defaulting mortgage payments in the USA.
Confidence levels in the UK housing market are already at a low, claimed by some to be even lower than the US. Fannie Mae and Freddie Mac, once seen as the sturdy walls encompassing the US housing market are now looking more like crumbling ruins, their vulnerability causing implications for the already destitute UK market.
If allowed to become faint replicas of the powerful companies they once were, the US housing market would crumble and many believe the US government won’t allow this to happen anytime soon.
Emily Beattie
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