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A New House - Risk and Benifits

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Submitted By mcaerok
Words 380
Pages 2
A New House
Mark Anderson
XECO/212
April 5, 2013
Anna Gonzalez

A New House
One government body that influences national fiscal policies is the Federal Reserve. The Federal Reserve is the central banking system of The United States. The Federal Reserve influences the interest rates on home loans through the buying and selling of bonds and securities. If the Federal Reserve purchases a large amount of bonds and securities interest rates on home loans will lower; causing a rise in home sales.
A recent national fiscal policy that effected mortgage rates, housing starts and housing prices is the bond buying stimulus plan that the Federal Reserve implemented in 2008. The bond buying stimulus plan is a plan where the Federal Reserve purchases bonds in an effort to keep long-term rates down. The bond buying plan was started in an effort to help spur investment and consumption in the economy. There was a drop in interest rates shortly after the implantation of the Federal Reserves new policy. A rise in housing starts and home sales can be attributed directly to the lowering of interest rates.
When it comes to weighing the risks and benefits of purchasing a home I would recommend a person find out as much information as they could on their own before consulting a professional. They should look at interest rates and determine if they are trending up or down. Look to see if the Federal Reserve is buying or selling bonds and securities in order to help determine the future trend of interest rates. If interest rates are trending down and the Federal Reserve is continuing to purchase bonds and securities it may be wise to wait as interest rates will probably continue to fall. However, if interest rates are falling and the Federal Reserve has started to sell back bonds and securities purchasing soon would be smarter since interest rates will

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