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Who do High Interest Rates Impact?

High mortgage rates can have a significant impact on more than just homeowners. The higher interest rate associated with mortgages has a ripple effect throughout the economy; businesses and individuals alike can suffer from an increase in the cost of borrowing money. Businesses often pass on the cost of borrowing to their customers, which can lead to increased prices, while individuals may find it harder to access credit or purchase large items such as cars and homes.

The rise of mortgage rates also affects those who are not looking to buy a home. For example, renters may be impacted by landlords who raise rents due to increased borrowing costs to the landlord. Additionally, people without mortgages may find it more difficult to access other types of credit such as personal loans, credit cards, and lines of credit if lenders look unfavourably upon the rising cost of mortgages.

Finally, high mortgage rates also have implications for local economies; when the cost of buying a home increases, this can reduce the average amount spent by households on goods and services produced locally. This could lead to reduced economic activity in affected areas as well as job losses. In turn, this may cause consumers to tighten their purse strings further and make fewer purchases than they otherwise would have done under different circumstances.