8 Sep

Credit crunch 'to ease' after US moves on Fannie and Freddie

Credit crunch 'to ease' after US moves on Fannie and Freddie

The return of much-needed confidence in money markets that could spell the beginning of the end of the credit crunch is a likely result of the US government's decision to take control of Freddie Mac and Fannie Mae, it has been stated.

At the weekend it was announced that President Bush's administration had decided to take over the running of the two lenders to prevent their possible collapse and the consequent damage to the US economy.

The bail-out is expected to ease the credit crunch because it will shore up the US mortgage market.

Merrill Lynch's head of Asia debt origination Jon Pratt told Bloomberg the move should "restore long-term confidence" in the markets, as share prices rose in early Far East trading.

London's Ftse is also expected to be boosted, with Graham Neale of stockbrokers Killik & Co telling the BBC: "The markets are certainly going to rally today because investors are going to say 'maybe we can see light at the end of the tunnel in terms of the credit crunch'."

Such a situation could make matters easier in the coming months for those buying for investment due to an improved availability of finance.

Cookies We use cookies to ensure that we give you the best experience on our website. To find out more about our cookies policy, see our cookies policy here or in the footer.