Especially regarding mortgage rates- folks are paying huge increases in monthly payments.
I’m assuming “to the government” but does it just get held somewhere?
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The mortgage rates are going up effectively because they’re being driven up by competition. The Fed interest rate is basically the “most free” money- its super short term and almost impossible to default. So every other interest rate goes up in return- because why would you lend money to someone for a house at the same rate when there’s some risk vs a bank to bank transfer that’s basically guaranteed.
The money disappears because people can borrow less. If you need to pay 1 percent interest on your million dollar home, it costs 10k to service. That’s the same as it costs to service a 2 percent interest rate on a 500k home, so taking principal put of the equation you can’t borrow nearly as much. In turn, the people selling those things start bidding down their prices because now the people buying their stuff can’t afford it.
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