[marketerinland]

Liquidity means capacity to buy, essentially. Not cash per se.

If you reduce the required deposit on a house from 20% to 10%, that increases the liquidity in the market. Suddenly more people ‘have’ the money to buy that $500k property and the market will typically rise until it’s absorbed that added financial capacity

This is why low interest rates had such a dramatic impact.

Monthly repayments are much lower on a low interest loan, so the average person could ‘afford’ to borrow way more.

Note; this is just Real Estate. Lots of other borrowing also occurred.

But when Real Estate markets suddenly go up by 20%, now it’s the owners of these houses that are worth a whole lot more. And they often decide to cash in, in some way (selling their J