Planned US government initiatives to help ease the impact of the sub-prime crisis have been met with cautious approval by the Australian market.
Under the US administration’s HOPE NOW scheme, individual homeowners suffering from mortgage stress will be able to access systematic relief by refinancing an existing loan to a new private mortgage, moving into an FHA Secure loan (Federal Housing Assistance) or freezing their current interest rate for five years.
“The US administration’s decision to step in should provide more confidence to the market that the sub-prime problems are contained,” Fariborz Moshirian, professor of finance at the University of New South Wales (UNSW), told Mortgage Business.
Moshirian expects the decision will also give lenders in the US a boost of confidence to continue funding mortgages, which in turn will “assist the US economy to grow”.
MFAA CEO Phil Naylor believes the move will help to free up the global credit markets as some pressure will be lifted.
Naylor however is not convinced that the scheme will provide a lasting solution to the failing US economy.
“At the end of the five year period they will still have the same problem in the US – they are simply postponing the agony for borrowers,” he said.
Who do you aggregate through?
Thank you for your vote, you can see the results here.
A former lending officer has been sentenced in court after pleadi...
ARNECC has advised that it has reassessed its proposed amendments...
A non-major lender has announced changes to its pre-approval proc...