Cheaper Mortgages

One of the U.S. economy's sturdiest pillars in 1958 got still another buttressing last week. To President Eisenhower went an anti-slump bill designed to pump up to $1.85 billion in Government funds into the housing market, already clipping along toward 1,050,000 new housing starts this year. Its goal: to raise the totals by another 100,000 houses, create 500,000 new jobs this year, and lay a solid floor under those sagging industries that lean heavily on home construction--appliances, lumber, transport, etc.

The program, scheduled to be signed into law this week, aims its main help at the mortgage market, where tight money pinched builders last year. The Federal National Mortgage Association (Fannie Mae) will get $1 billion to buy FHA and Veterans Administration-insured mortgages up to $13,500 each at par (100%) value. Previously, Fannie Mae bought mortgages from lenders at discounts of 2% or 3% from par and found the market slim. Now, by fixing the price of FHA and VA paper at par, Fannie Mae expects lenders to sell more mortgages to the Government, thus unlocking up to $1 billion in fresh credit. In addition, the bill gives $550 million to Fannie Mae to buy mortgages on urban renewal projects, low-cost and military housing and homes for aged buyers, and authorizes $300 million for direct Veterans Administration housing loans.

Whether or not the plan actually results in another 100,000 new houses, it should at least give housing a solid push along its road to recovery. From last year's disappointing record of 990,000 starts, home building jumped in January to an annual rate of 1,030,000 starts, about 3% better than expected. Although storms and snow chilled the pace in February and March, builders point to a continuing uptrend in the South and West, expect the first sign of spring to thaw out a rush of weather-stalled starts.

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