Bouyant Housing Market Funded by Government
Posted on September 3rd, 2009
Terrific home mortgage rates are one reason why this summer saw notable and consistent jumps in home sales. Government participation in the housing market is another reason why home sales have surged.
The $8,000, fully refundable federal tax credit for first time homebuyers is the obvious example of government involvement in the housing market, but a look at the FHA system shows how deep this involvement goes.
FHA Loans More Than Triple Since 2007
David Hogberg had a nice piece on Yahoo about what’s been going on with FHA funding in 2009–namely, the number of FHA-insured home loans has tripled in 2009, as compared to 2007 levels.
530,000 in 2007, and 1.70 million so far this year…with four months still left in the year.
Meanwhile, Over at Ginnie Mae
The government agency that packages FHA loans into securities that are later–hopefully–sold to investors is called the Government National Mortgage Association, or Ginnie Mae.
Ginnie Mae has raised its issuance of mortgage-backed securities from $85 billion to $287 billion.
Federal Role in Housing Deep and Getting Deeper
Without these actions by the government, it is unclear how hard the housing market would have crashed. Certainly much harder than it did crash, and it crashed pretty hard.
Over the next few years, it will be interesting to see if and how the U.S. government stops acting as the world’s biggest mortgage lender.
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Tags: Government, Housing Market
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