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Shares in US mortgage firms Freddie Mac and Fannie Mae dropped by as much as 50% in roller coaster trading last week amid concerns for their future. The US firm is the largest mortgage provider in america with almost £3 trillion dollars worth of home loans secured by the bank, almost 50% of the market. Speculation that US regulators were lat night preparing to step in to rescue the two compnanies, which are owned by shareholders but have government-sponsorship was greeted with concern in London city. 

The effects of last weeks near collapse, are likely to put upward pressure on inter bank lending rates and once again increase the cost of borrowing in a lending environment that´s already very tough. The only slight silver lining to this latest financial cloud is that it should take a few months to trickle through the money markets.The affects of this are likely to be felt in London city where indirect repercussions for British banks and markets will be less confidence and liquidity in the markets.