The cavalry is coming from all sides. The Federal Reserve has thrown traditional tactics to the wind with aggressive attempts to head off a financial and economic crisis. The Treasury and Congress have pitched in with a stimulus package. Now policymakers seem to have leant on the Office of Federal Housing Enterprise Oversight, the body regulating Fannie Mae and Freddie Mac, to do its bit for the housing market.

Loosening the reins on the mortgage giants is not a cure-all for the illiquidity in the secondary mortgage market that is causing such stress for banks. But the regulator's decision to cut the level of excess capital held by the two governmentsponsored entities (GSEs) from 30 per cent to 20 per cent will provide a boost for new borrowers. The move will release as much as $200bn to guarantee or buy mortgage-backed securities. That could particularly help to reduce high rates for "jumbo" mortgages that the GSEs can now buy. And there should be more ammunition coming down the line, as the GSEs have also committed to raising new capital to bolster their balance sheets.