LITTLE SCOPE FOR U.S. RATE RISE - FANNIE MAE<FNM>
There is little scope for a substantial
increase in U.S. interest rates during 1987, said Federal
National Mortgage Association chairman David Maxwell.
    Speaking to the New York Financial Writers' Association,
Maxwell said he viewed this week's rise in U.S. banks' prime 
rates to 7-3/4 pct from 7-1/2 pct as a temporary phenomenon.
    "I don't see a substantial rise in rates this year. If
anything, the Federal Reserve is more likely to ease than to
tighten (monetary policy) because so many sectors of the
economy are showing weakness," Maxwell said. Fannie Mae buys
mortgages from lenders and issues mortgage-backed securities.
    Maxwell said restructuring of Fannie Mae over the last two
years had limited its exposure to interest rate fluctuations. A
one pct rise in rates in 1987 would cost shareholders about 18
cts a share versus one dlr a share in 1981, he said.
    Maxwell also questioned the view that housing crowds out
other sectors of the economy from obtaining needed capital.
    "There's no evidence that housing is crowding firms out of
the long-term debt market," he said. Both home mortgage debt
and long-term corporate debt grew at about equal annual rates
of about 13 pct in 1986 -- a year when mortgage originations of
442 billion dlrs needed record housing capital, he said.
 Reuter
