Experts: Fannie-Freddie bailout may sink interest rates
The federal government?s takeover of mortgage giants Fannie Mae and Freddie Mac may be the latest sign of the housing crisis, but some experts say it could be good for Long Island homeowners.
The two companies back nearly half of the country?s mortgages. Recently in trouble, Treasury Secretary Henry Paulson is calling for spending $200 billion of taxpayers? money to keep them afloat.
Experts believe federal intervention would likely lead to lower interest rates. This is good news for those looking to buy a home, even though the bailout money comes out of taxpayers? wallets.
Refinancing is already hard enough in today?s economic situation, mortgage broker Marc Schwaber says, but if Freddie Mac and Fannie Mae had gone under, it would have been that much more difficult.
"Don't put your head in the sand and say it?s all going to go away,? Schwaber says. ?It?s not going to go away, but you can work with your local lenders.?
However, Dowling College economist Irwin Kellner says getting money from a lender won?t be easy, even with lower interest rates. He says mortgage lenders and banks will likely be more discerning when giving out loans from now on.
"I wouldn't be surprised if banks ask for your other business--savings account, checking, [and] credit cards,? Kellner says. ?All of that might get you a loan at this new lower rate, if it ever materializes.?
Click for what experts are saying about refinancing now
To see the extended interview with Kellner, go to Channel 612 on your iO digital cable box and select iO Extra.