What drives interest rates?
Posted by taylor | Under Interest Rates Monday Jul 26, 2010What drives interest rates?
As a property investor, is important to understand what causes interest rates to change. The government uses interest rates as a lever to control the economy. Put simply, if the economy is growing too fast, the government increases interest rates to slow the economy. Conversely, interest rates tend to reduce in times of economic slowdown.
The neutral cash interest rate is in the 4-5% range, which corresponds to a 6-7% mortgage rate.
What drives interest rates?
If you enjoyed this post, make sure you subscribe to my RSS feed!
