The government bodies that influence the national fiscal polices that potentially affect the housing market are the Federal Reserve. This body decides the rise and fall of interest rates. For example, if the rate decreases, more money is introduced into the economy. This will trigger the interest rates to decrease and therefore increase the demand for the housing market and then solidifies the prices of homes. Also, if the rate increases, less money goes into the economy and interest rates will increase and the demand for houses will fall. Another government body that will influence the national fiscals policies is The Department of Treasury. In 2009, the Department of Treasury introduced The Home Affordable Refinance program was available to homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. These home owners were able to refinance their loan and take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.
There are many national fiscal policies that can affect the mortgage rates, housing starts, and housing prices. The lending rate seems to be the most important issue. This establishes if lenders can borrow money from the Federal Reserve to put money into mortgages and housing starts. The higher the interest rates go, the higher the prices of the houses are. If the interest rates are too high, many people will be able to make use of banks and the price of homes will begin to fall.
My recommendations as to the risks and the benefits of purchasing a home based on these considerations are for all first time buyers to consider purchasing a home using the American Recovery and Reinvestment Act. This is the act that Congress put in place to give these first time home buyers a tax credit of up to $8,000. This has been extended until June 2010.