Introduction An economy may experience both direct and indirect consequences arising from interest and mortgage rates. Any country intending to increase its loan facilities and the circulation of money is also inclined to major difficulties. There are many problems experienced by a number of countries in creating a balance between mortgage rates and an expansionary economy. Some of these issues concern keeping progressive price increases under control. Seeing that mortgage rates are not high, the growth of an economy is another issue experienced by countries. However, these problems have become rather challenging to these countries. This essay will discuss some of the major issues that the countries experience in developing a balance between mortgage rates and an expansionary economy. According to Hubbard (2008), in the last ten years, the increasing housing price greatly depends on the primary debt pay decrease that influences mortgage recipients. As a result of this, middle-class citizens can manage to acquire a house. This process of owning a home can lead to a high level of demand and this successively can raise the cost of houses. Developing a balance between mortgage rates and an expansionary economy Fiscal policy is an approach by which countries regulate their level of expenditure with the aim of tracking and shaping the economy (Heakal, 2002, par.1). As a result of the 2002 growth in housing and the increase in mortgage rates, the government policies were put in force to decelerate and amend the housing problems faced. The government implemented economic decline policies to retard high demand and keep prices from fluctuating. In order to combat the growth in housing and the increase in mortgage rates, high-interest rates were implemented. With the introduction of the sub-prime mortgage rates amendments in 2006, several landlords could not uphold the changed mortgage rates and defrayments, thereby, driving mortgages into legal proceedings to repossess the security for a mortgage loan that is in default. In addition to the meltdown in the business of mortgaging, the declining housing market and increased interest rates set out a downward constant accelerating alteration in the economy. Economic development requires the implementation of monetary policy, which is a guiding principle of shaping the economy through transformations in the banking system’s treasury that manages the supply of official currency issued by the government and credit accessibility (Hubbard, 2008). The former monetary policy includes a reduction in the rate of federal funds to manage economic issues. Monetary policy, on the other hand, has definite but not specified weaknesses. It has a wide-ranging effect on all parts of the economy. Economic professionals often differentiate credit, assessment, and impact of slow development. However, the advantages of monetary policy are delimited to uphold low, constant, and expected cost increases as the most excellent effort that monetary policy can introduce to an operational economy. It influences individual expenses and investment choices with self-confidence. In the year 2001, the Federal Reserve System forcefully progressed to oppose the weakness that had surfaced in total supply. Toward