9 Sep

Freddie and Fannie rescue 'will boost UK liquidity'

Freddie and Fannie rescue 'will boost UK liquidity'

The link between what has been happening in the US mortgage market and the performance of the sector in the UK means the rescue by the American government of Fannie Mae and Freddie Mac will be good news for Britain, it has been stated.

Chief executive of property firm Badger Holdings Tony Addinall said the sub-prime crisis had been the "catalyst" for the credit crunch and suggested that the security provided by federal backing for the two lenders could help improve the levels of investor confidence in Britain by reducing the uncertainty that has existed in recent months.

Andy Cuthbert of Badger's financial arm Dot Financial Services added to this: "Although we are yet to see what direct impact this action will have, it is definitely a positive step."

The action of the federal administration in buying mortgage-backed securities may also provide a policy template for the British government, it has been suggested.

Chris Cummings, the director general of the Association of Mortgage Intermediaries, said such a policy should be applied in Britain as a way of increasing liquidity.

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