[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. Res. 80 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
S. RES. 80

    Expressing the sense of the Senate on the impact on the housing 
    industry of interest rate increases by the Federal Open Market 
                Committee of the Federal Reserve System.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            February 24 (legislative day, February 22), 1995

   Mr. Dorgan (for himself, Mr. Baucus, and Mr. Reid) submitted the 
 following resolution; which was referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                               RESOLUTION


 
    Expressing the sense of the Senate on the impact on the housing 
    industry of interest rate increases by the Federal Open Market 
                Committee of the Federal Reserve System.

Whereas the Federal Open Market Committee of the Federal Reserve System has 
        increased interest rates 7 times during the 12 months preceding the date 
        of adoption of this resolution, despite the absence of any serious 
        threat of inflation;
Whereas the inflation rate declined to very modest levels during the 4 years 
        preceding the date of adoption of this resolution;
Whereas the Board of Governors of the Federal Reserve System maintains that the 
        Consumer Price Index overstates the true rate of inflation by as much as 
        50 percent;
Whereas increases in short-term interest rates have been accompanied by 
        increases in long-term interest rates, reversing the downward trend that 
        helped strengthen the national economy;
Whereas such higher interest rates will have a devastating impact on the 
        economy, including home builders, homebuyers, and homeowners;
Whereas higher interest rates will increase the Federal deficit by adding 
        $171,000,000,000, over 5 years, to pay the interest on the national 
        debt;
Whereas the housing industry is one of the most interest rate sensitive sectors 
        of the economy;
Whereas some home mortgage payments have increased by hundreds of dollars per 
        month because of the increase in interest rates by the Federal Open 
        Market Committee;
Whereas the interest rate on a 30-year fixed rate mortgage increased from 
        approximately 7 percent since February 4, 1994, to the level of 9 
        percent 12 months later, increasing the monthly payment on a $100,000 
        home mortgage loan by more than $140 per month;
Whereas homeowners with adjustable rate mortgages will spend an estimated 
        aggregate increase of $12,000,000,000 to $15,000,000,000, in monthly 
        payments during 1995; and
Whereas the National Association of Home Builders estimates that a 1 percentage 
        point increase in mortgage interest rates means that approximately 
        4,000,000 households could not qualify to purchase a median-priced home: 
        Now, therefore, be it
    Resolved, That it is the sense of the Senate that--
            (1) additional interest rate increases at this time could 
        risk throwing the economy into a recession;
            (2) the Board of Governors of the Federal Reserve System 
        should act with caution so as not to risk another recession; 
        and
            (3) the Board of Governors of the Federal Reserve System 
        should carefully weigh the effects of interest rate increases 
        on homeowners, homebuyers, home builders, and American 
        taxpayers when evaluating interest rate policy.
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