Aug 93 6.63% 6.77% 6.91%
Sep 93 6.54% 6.67% 6.81%
Oct 93 6.40% 6.53% 6.66%
Nov 93 6.40% 6.53% 6.66%
Dec 93 6.51% 6.64% 6.78%
Jan 94 6.54% 6.67% 6.81%
Feb 94 6.44% 6.58% 6.71%
Mar 94 6.58% 6.71% 6.85%
Apr 94 6.88% 7.02% 7.16%
May 94 7.25% 7.40% 7.55% -------- -------- --------
12-month average* 6.65% 6.88% 6.92%
[source: "Banking and Finance," 1994, p. 110]
Monetary and fiscal policies affect the commercial real estate in a variety of ways. Further, a single policy action may produce conflicting results. The great majority of commercial real estate construction and sales are financed through the issuance of mortgage loans. Thus, the level of mortgage interest rates tends to exert an almost immediate and a meaningful impact on commercial real estate construction and sales. Higher interest rates reduce the pool of potential commercial real estate purchasers who can qualify for a mortgage loan, and cause other potential buyers to drop out of the market because they are unwilling to pay the higher costs. The Federal Reserve can exert a significant influence on the level of mortgage interest rates through the development and implementation of monetary policy. Through manipulation of the money supply, the Federal Reserve can cause mortgage interest rate changes on a somewhat delayed basis. Through the setting of the discount rate and the int...