Fannie Mae executives, in a conference call with analysts on Friday, said they intended to reduce the growth of the company’s loan portfolio and stop buying riskier so-called Alt-A mortgages by the end of the year. Fannie Mae will also begin charging more to guarantee loan repayments, a step that is likely to push mortgage rate higher.
“Fannie and Freddie’s decision to curtail support of the mortgage market is going to make mortgages more expensive for potential home buyers, which is going to hurt the overall economy,” said Howard Shapiro, an analyst at Fox-Pitt, Kelton. “They’re the only real buyers in this market, and they’re going to buy less. That’s really bad news.”
1 year ago
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And it is only getting worse I’m afraid.
The Federal Reserve's Loan Officer Opinion Survey on Bank Lending Practices published today highlights the on-going credit crunch and lending squeeze. From the quarterly survey:
On the credit supply side, domestic and foreign respondents "expect their banks to tighten credit standards on all major loan categories in the second half of this year, and smaller, though substantial, net fractions of respondents expected their banks to tighten standards in the first half of 2009."
On the demand side: "Demand for loans from both businesses and households at domestic and foreign institutions reportedly weakened, on net, over the past three months."
Finally, not good news for people using credit cards to stay afloat:
"About 65 percent of domestic banks—up notably from about 30 percent in the April survey—indicated that they had tightened their lending standards on credit card loans over the past three months, and about the same fraction of respondents—up from roughly 45 percent in the April survey—reported having tightened standards on consumer loans other than credit card loans."
Retired IB’er
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