The media is all over the map describing in sweeping headlines how the American and international financial systems are on life support. Central banks across the globe are pumping all sorts of cash into their respective banking sectors to stay ahead of the advancing wildfire and keep the entire inter-connected financial network from collapsing. It's important news, of course, and has caught consumers from Las Vegas to Washington in this tantalizing development.
There is at least one sector in the U.S. financial system that is presently surprisingly stable, though. It's the mortgage business. True, it does have some issues to deal with like painfully high foreclosure numbers and tighter underwriting guidelines but when it comes to having capital available to make home loans, it's there.
It's possible because Washington has practically taken over a large share of the industry through its institutions Fannie Mae, Freddie Mac and FHA. They have an easy and cost-effective access to international capital markets thanks to having the U.S. Treasury guaranteeing whatever they do there. At least for now the mortgage trade is pretty much controlled by the government but under these trying circumstances its involvement was necessary. Without it the besieged real estate market would be now wallowing in muck thigh high.
Mortgage rates are still very attractive and those with decent credit can get a home loan. An FHA-insured loan can be acquired for 3% down and Fannie Mae and Freddie Mac have programs requiring only 5% down. Those are good, low numbers. And what also is uplifting is that many of the once over-heated markets, like Las Vegas, are seeing prices in full retreat and that is bringing buyers out to look for bargains.
Today, despite the spectacular roller-coaster activity on Wall Street and banking deep freeze the mortgage market is holding its own and open for business.