Does the UK need a Fannie Mae?

Born in the middle of the Great Depression, Fannie Mae bought federally insured mortgages, thereby creating a consistent and reliable source of funds to support conforming loans. Privatised in 1968, and joined by Freddie Mac shortly after, an implicit – and so far untested – government guarantee has enabled the pair to borrow at rates close to those of the US Treasury and operate with levels of debt far higher than a true commercial competitor could countenance. The role of these shareholder-owned companies “with a public mission” to buy and insure mortgages allowed, in effect, the development of the mortgage-backed securities market.