Ground Floor: Although the rate of house price increases slowed to 8.6 per cent last year, and while most analysts seem to estimate a rise of around 7 per cent for 2005, the crash suggested by the Economist magazine neither happened nor appears likely to happen.

However, the concept of buying a house (any house) at a price (any price) seems to have taken a bit of a breather.

'For Sale' signs seem to hang around a bit longer these days and potential buyers have a greater idea of what they want and what they're prepared to pay for it.

Nevertheless, the mortgage business remains good for Irish financial institutions and, even though the loan-to-value ratio may have increased over the past number of years, and even if kids are plundering their parents' savings to get themselves on the property ladder, nobody is being left in the dreaded negative equity situation that is occasionally mentioned just so that we don't lose the run of ourselves completely.

Where there has been a slowdown is in investment money pouring into domestic property. More and more people have been taking their money overseas.

It's tempting to think that you can buy an apartment in an eastern European country for about €20,000 and see it surge in value to €200,000 in a few years but there is an element of dotcom mania about overseas property these days that makes me wonder whether or not bricks and mortar may yet cause despair among diversifying investors.

My personal view is that property is always a good bet but, if you want to go further afield than a two-hour plane hop, maybe you'd be better off in a property fund rather than actually buying the must-have apartment in downtown Altinkum.

The US, and Florida in particular, has been a popular long-distance plundering ground for property too, but surely caution beckons there when the real estate agents now tell you that it's a good way to leverage yourself in the currency market!

That's the problem with houses these days - they've become a short-term investment when they used to last a lifetime.

For US citizens looking to buy a home, almost three-quarters of mortgage financing is carried out by the agencies Fannie Mae and Freddie Mac.

I wrote about them a few months ago because both companies had got into a certain amount of trouble with regard to accounting procedures.

In the case of Fannie Mae, an estimated $200 million (€150 million) in expenses were deferred, which made the bottom line on the accounts look a lot healthier and gave the executives rather decent bonuses as a result.

Freddie Mac spent a lot of last year re-auditing its books, which ultimately led to the firing of its president and the resignations of the chief executive, chairman and chief financial officer.

Now US Federal Reserve chairman Alan Greenspan is getting on their case. He recently told the House Financial Services Committee that he can't see any reason for these two agencies to have mortgage portfolios of more than $1.5 trillion between them. That's real exposure to the property market!

According to Greenspan, problems with Fannie Mae and Freddie Mac are "almost inevitable".

The truth is, he's worried because they're so big that they can't be allowed to fail.

The core competency of the mortgage agencies is involvement in the securitisation market. This is a nifty way for lenders to sell their mortgages on to someone else.

You, as the mortgage holder, have no idea that your mortgage may be part of this sale because you continue to deal with your mortgage provider as before - just your mortgage is no longer on their balance sheet.

Securitisation doesn't just happen with mortgages, although they're an ideal package, it works for any future stream of income (David Bowie famously securitised the royalty payments from his records a few years ago).

Anyway, Greenspan is a little hot under the collar about the fact that Fannie Mae and Freddie Mac are doing little other than buying mortgages and securitising them, and he said that they're only doing it because the margin is so good.

The reason the margin is so good for them is because they can borrow money cheaply thanks to their implicit government guarantee, which means that investors think that lending to the agencies is a no-brainer. But authorities don't want it to be a no-brainer.

Supporting Greenspan, treasury secretary John Snow said that investors were deluded if they thought that agency debt came with an implicit or explicit government guarantee. The bottom line is that Congress is looking at the role Fannie and Freddie are playing in the domestic mortgage market.

Fannie Mae was ordered to raise the amount of capital it keeps against the various risks involved in the mortgage market - interest rate falls, defaults or early repayments. The result of that - and Greenspan's exhortation to Congress to slim down the agencies because he feels that their continued growth has the potential to put the entire financial system at risk - was to rattle the share price.

But generally speaking, the buyers of agency paper are still happy to hold it and are not that put out about Greenspan's or Snow's worries.

Greenspan isn't used to being ignored by the market. Many commentators think that Snow wants to take over the regulation of the agencies.

The whole agency thing is a double-edged sword for the authorities. They want to spook the people who think that, in a crisis, the government will bail them out. But they don't want to provoke an actual crisis because that would mean the whole thing imploding like the proverbial house of cards.

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