Fannie, Freddie, Lehman Brothers and Merrill Lynch: How will they affect the housing market?

How will all the current catastrophes affect the mortgage and housing market? Well, over the past eight years we have had a pretty good run of it in the housing market, we have seen the house prices shoot up, most people fitted banking criteria and were provided with loans, we generally didn’t have too much to worry about in the housing market and it was booming.

Then the credit crunch hit, and it seems to have been one catastrophe after another, but what does all this mean and why is it affecting the housing market now? As mortgage rates dropped last week after the Freddie Mac and Fannie Mae bailout, and they dipped slightly on Monday after the bankruptcy of Lehman Brothers along with the struggles of AIG and the sale of Merrill Lynch. The lower mortgage rates along with the bargain foreclosures could be crucial for a housing recovery as buyers move into the market with hope to get a bargain.

It was reported that mortgage brokers saw a big increase in inquiries last week, and lenders reported that they also saw an upsurge in interest in placing loan applications.

Read the full article at sfgate