A new house- risks and benefits
University of Phoenix
The National Association of Realtors is trying immensely in order get congress to respond to a legislation that will help families extend their loan commitment, using the rural housing service program. This program enables low income families to buy houses. The government body can use their influence to help get this law passed, which will affect the housing market by allowing more families to be able to afford to purchase a home and the increase in housing purchases will stimulate the housing market. This could result in a higher rate for the housing market. This may also increase the jobs of building houses, which in return would place more disposable income into employee’s pockets, which will increase the demand for housing, and will also increase the housing prices. “As private mortgage markets have dried up, many rural families will be left out in the cold without these guaranteed loans. Increasing the commitment authority will assist rural families, support local housing markets, create jobs and generate new tax revenues,” Golder said.” (Salvant, 2010)
The Federal Reserve has been using their influence on national policies to affect the housing market, by keeping mortgage rates down. “The prime reason for the Fed's commitment to buying Treasury debt was to lower mortgage rates to revive the moribund housing market.” (Bogoslaw, 2009) The main reason that the Federal Reserve is trying to keep mortgage rates low is to help the housing market. Mortgage rates can affect the housing starts and the housing prices. So in order to keep the housing market from going under the Federal Reserve is trying to keep mortgage rates low. For example since the economy has lowered the Federal Reserve is trying to lower the discount rate as a way of stimulating investments. The lowering of these rates would increase the supply of cash flow and as a result it will make interest rates lower. This will raise the...
Cited: Bogoslaw, D. (2009, 06 09). The Fed 's Mortgage Muddle. Retrieved 07 30, 2010, from www.businessweek.com: http://www.businessweek.com/investor/content/jun2009/pi2009069_296350_page_2.htm
Salvant, L. (2010, 04 27). NAR urges fast senate approval of rural housing bill passed by house today. Retrieved 07 30, 2010, from realtor.org: http://www.realtor.org/press_room/news_releases/2010/04/rural_housing
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