Housing market to be supported, says Federal Reserve

The US Federal Reserve has announced it is allocating an extra USD600 billion (GBP393 billion) in a bid to raise the level of liquidity in the mortgage markets.

It announced that USD100 billion will be spent very soon on buying up obligations of government sponsored mortgage enterprises Fannie Mae and Freddie Mac in a series of competitive auctions.

Following this, it will allocate another USD500 billion to fund managers to buy up mortgage-backed securities from the same two firms plus Ginny Mae, a process that it said will be spread over "several quarters".

Those investing in overseas property may benefit from this should it successfully increase the level of liquidity in the sector, as this would raise the availability of mortgage funding for property purchases.

In further news concerning the US economy and property market, president-elect Barack Obama has announced key appointments to his economic team.