A Shot in the Arm for the Economy

It looks like the economy in general and the real estate market in particular is set to get a shot in the arm over the coming weeks. Freddie Mac and Fannie Mae have been approved to reduce their reserve requirements from 30% to 20%.

What does this mean? Well, when all of this sub prime mortgage crisis started, they were required to increase their reserve requirements up to 30% and this removed a lot of liquidity from the mortgage market. Now that they can reduce their reserve requirement, they can add a lot of liquidity to the market and start approving more loans. It’s estimated that several hundred billion dollars in liquidity is added to the market with this change.

Could it be the that economy is beginning to turn a corner?

This post is tagged with: Business , loans , Real Estate