That's why buyers are advised to stress test their mortgage before buying and assuming that they can afford it by modelling the effect of small, medium and large interest rate increases on repayments and their ability to meet them. And to have a plan for the worst case scenario if they proceed.
They won't as far as your mortgage goes but you're not the only person/entity in the economy!
Could you explain to me in dummie terms, why would ecb want to put up interest rate. What is the reason for it.That's why buyers are advised to stress test their mortgage before buying and assuming that they can afford it by modelling the effect of small, medium and large interest rate increases on repayments and their ability to meet them.
They won't as far as your mortgage goes but you're not the only person/entity in the economy!
US based but the general principles apply to any economy.
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Thanks. So there is the possibility of house prices going down as a result as less people will be able to afford to borrow and repay at higer rates. In turn less demand for houses. Those that bought(took out a 80 to 90% mortgage) in the last 3 to 4 years are on course to negative home equity.US based but the general principles apply to any economy.
How Interest Rates Affect the U.S. Markets
Changes in interest rates can have both positive and negative effects on U.S. stocks and bonds.www.investopedia.com
Monetary policy tries to avoid such dramatic shocks. A graduated increase in the cost of credit should not wipe out 20% of the value of a property
but monetary policy doesn't control the real world, it didn't stop the arab oil embargo of 1974 which caused the 1970s inflation phenomenon and its not stopping Putin today. In fact it is Putin that is forcing the central bankers hands now, they don't want to raise interest rates but they are being forced into it by the rising cost of energy,