By Ilaina Jonas
NEW YORK, Feb 27 (Reuters) – Shares of U.S. home builders rose on Wednesday after positive remarks from Lehman Brothers, comments by the chairman of the Federal Reserve and a decision by U.S. regulators to lift investment caps on mortgage giants Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research).
Shares of U.S. home builders were up 1.8 percent in afternoon activity. Shares of Toll Brothers Inc (TOL.N: Quote, Profile, Research) traded 2.3 percent higher, despite reporting a greater-than-expected quarterly loss.
The Office of Federal Housing Enterprises Oversight on Wednesday lifted the caps on their portfolio allowing Fannie Mae and Freddie Mac to buy more mortgages.
Whether they will buy more is another story, said Mike Larson, analyst with Weiss Research.
“If when it comes down to it, Fannie and Freddie get the ability to expand they also may tighten their credit standards,” Larson said. “There will likely be some benefit. The question is how much.”
Fannie Mae and Freddie Mac buy mortgages and then issue bonds based on the payments of those mortgages.
Robert Toll, chief executive and chairman of Toll Brothers said that the cap relief was a positive step, but Washington needs to do more to turnaround the depressed U.S housing market.
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