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Housing Market May Double Dip
Meredith Whitney, CEO of Meredith Whitney Advisory Group, says mortgage backed securities are in for a correction and “the housing market surely will double dip.”
Whitney said the government initiated measures to support the housing market have been “murky” and the likely wave of foreclosures will force the housing market further down.
When the Federal Reserve stops buying mortgage securities (which ended on March 31st), the prices of mortgage securities will be under pressure.
“The Fed has been supporting the housing market, a third of the Fed’s balance sheet is tied to mortgages.
If the Fed pulls back, that’s a really big deal because there’s no substitute buyer.”
Under the current circumstances, the Federal Reserve can’t make banks start lending again which will only slow this hopeful recovery.
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April 8th, 2010
Posted by admin in Finance | No Comments »