Friday, December 25, 2015

Vahe Hayrapetian: Politics and Interest Rates.

How Do Politics Effect Interest Rates?

In the perfect capitalistic world, interest rates would be set by objective, disinterested parties. Realistically, politicians can influence the interest rates for property loans in many ways.

Federal Reserve Monetary Policy

The United States Federal Reserve (Fed) is an organization of high-level bankers who effectively run American monetary policy. By determining the interest rates that banks can charge one another, the Fed can effectively control interest rates.

United States Congressional Policies

In the 1990s, the United States Federal Government established public policy to improve the home ownership rates in the nation. Freddie Mac and Fannie Mae, as pseudo-government organizations, have been effective in offering cheaper loans to attract buyers.

Changes in Leadership

New administrations will usually want to establish their own unique characteristics for the real estate market. After elections, interest rates may be adjusted in order to encourage or discourage more property buying activity.

Politicians might also try to hide their future policy decisions to prevent speculators from profiting. Politics can influence interest rates, but the market still drives property prices. Discover how experienced California Realtor Vahe Hayrapetian can help you anticipate and prepare for interest rate changes due to politics.

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