What is the impact of the US mortgage rescue on the Chiswick property market?
The U.S. government took control of mortgage finance giants Fannie Mae and Freddie Mac on Sunday in a huge bailout to support the U.S. housing market and ward off more global financial market turbulence.
The Financial Times says the move was "the most dramatic since the start of the credit crisis". The rescue should result in lower mortgage costs and make credit more available. But lending standards will stay tight and risky borrowers will still pay extra fees.
Initially, mortgage rates may fall but probably not enough to halt the decline in home prices – at least not immediately. For example, HSBC cut up to 0.56 per cent off a range of fixed rate mortgages, a saving of around £500 a year for a typical borrower.
The Bank of England is now expected to start cutting its base rate before Christmas, finally lightening the load on the property market. Although few analysts will say that the credit crunch is over, there is a growing sense of cautious optimism.
Ray Boulger of mortgage brokers John Charcol said the rescue could make mortgages more available for first-time buyers: "It's not the beginning of the end of the credit crunch - more like the end of the beginning’.
