DOWNTOWN HONOLULU (KHNL) - Some possible good news for Hawaii's often overheated housing market, but on the flip side a possible huge tax hit for all of us. This after the federal government steps in, to bail out two of the country's largest mortgage lender
The Dow jumped 290 points Monday, and most financial and housing stocks are up, but this bailout also means taxpayers like you and me end up paying for it.
When it comes to real estate, Freddie Mac and Fannie Mae are king and queen of the castle, controlling half of the country's home loans, about $5 trillion worth. But that castle's crumbling, and the federal government had to step in.
"It gets people who are really nervous about whether or not the financial system is going to implode, I think it helps us get over that hump," said Bill Mason, certified financial planner.
And the impact has been instantaneous.
"The immediate boost is to the stock market, both the international markets and the domestic market today had huge rallies," said Mason. "So it's really reassuring to the investing public around the world."
And it could help Hawaii's real estate.
"I think it's going to help investors and people who are looking to get into a home, feel more confident," said Mason. "It's also going to actually lower mortgage rates going forward, so housing will become a bit more affordable as well."
The bailout could also help slow the credit crisis. Both Fannie Mae and Freddie Mac lost $14 billion last year, and could lose more if the economy doesn't pick up soon.
So, financial experts applaud the government's intervention, saying it's giving the economy a much needed jolt.
"I think this is something that really needed to be done," said Mason. "And I'm glad they jumped all over it and made it happen this weekend."
So, this bailout has already had a positive impact on mortgage rates. A 30-year fixed rate dropped 0.3 percent, to 6.04 Monday.