The Role of Money and Capital Markets
The availability of funds for financing real estate, and thus the ability of buyers to buy real estate, is heavily tied to government policy, monetary policy, lender requirements, and the overall economy. For example, the availability of funds used for loans to purchase real estate also affects the interest rate charged for those loans. The greater the availability of capital to finance real estate, the lower the interest rate. Conversely, if capital is scarce, the interest rates will be higher.
The Federal Reserve System
The Federal Reserve System has the greatest effect upon the availability of money in the economy. Regulating the money supply is one of the most significant roles of the Federal Reserve.
The Federal Reserve is the central bank of the United States and is an independent banking system designed to manage money and credit and to promote orderly growth in the economy.
The Federal Reserve has the authority to fix the amount of reserves a member bank must keep on hand. The reserves are the total percentage of deposits banks are required to keep on hand and not lend. The amount the banks may lend out is a percentage of the total deposit. By changing the amount banks are required to keep on hand, the availability of credit changes.
The Federal Reserve also makes loans to its member banks.The Federal Open Market Committee (FOMC) is another way the Federal Reserve regulates credit. The FOMC buys and sells government-backed securities on the open market.
Coastal Keys Realty Group, Inc
5400 Carillon Point, Bldg. 5000
4th Floor Kirkland, WA 98033
info@CoastalKeys.com
(800) 620-5720
5400 Carillon Point, Bldg. 5000
4th Floor Kirkland, WA 98033
info@CoastalKeys.com
(800) 620-5720
Kenny & Donna Goodwin
Thank you for all of the help Brandy. You made everything run smooth. Kenny lo...
Thank you for all of the help Brandy. You made everything run smooth. Kenny lo...