Leo Varadkar under fire for ECB interest rates remarks.

Interest% said:
I dont know the economics of it all, all i can say from my own situation is that if mortgage interest rates go up beyond 4%, it would put my household into financial difficulty. Id be paying more money in interest off the mortgage.
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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.
I cant see how higher interest rates will benefit my life on earth, it will only create hardship.
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They won't as far as your mortgage goes but you're not the only person/entity in the economy!

You are aware that even in my own lifetime retail interest rates here were as high as 20% at one time!
 
Could you explain to me in dummie terms, why would ecb want to put up interest rate. What is the reason for it.
 
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.
 
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
 
skrooge said:
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
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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,
Of course inflation is also being caused by the supply disruptions as a result of covid lockdowns but it is predominately an energy problem. In fact it is the supply disruptions as a result of covid lockdowns that has probably emboldened Putin to take this action in Ukraine in order to prolong this now and keep energy prices increasing
 
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