Paulson Denies Rumored 4.5 % Mortgage Rate Plan
by Tom on December 18, 2008
in Market Musings, house prices
The U.S. Treasury Department secretary Henry Paulson spoke out Tuesday denying the rumor that he and the Treasury are contemplating a plan to initiate a 4.5 percent mortgage rate for new home loans issued through Fannie Mae (FNM: 0.69 0.00%) and Freddie Mac (FRE: 0.71 0.00%), according to a MarketWatch bulletin. “We didn’t float any plan,” Paulson said. “I am always looking at new ideas and I have said from day one that the key thing to get us through this period is getting housing prices down.”
A couple of comments for you:
- He said “We” didn’t float any plan, but that doesn’t necessarily mean that someone in his department didn’t leak any idea.
- For reasons that many people have laid out and I’ve discussed here and other place, it doesn’t make sense and won’t solve the housing problem doing it.
- He said the key is to getting housing prices down – that’s quite a switch from what everyone else is saying which is that we need housing prices to stay up to keep the mortgage world going. What’s up with that?
Stay tuned, I’ll try to write more as the day goes on.
