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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So the interest rate they raised is what they charge Banks for loans.
This is the key part. Banks take out loans so that they can loan out money to businesses and consumers.
The interest rates a bank pay on the loan they take out is different from what they charge people who get a loan from them.
They are tied together insofar as the bank still wants to make money, so they charge their customers a higher interest rate than they are paying on their loans.
But this really isn’t generating more money in interest payments, unless you happen to already have a loan that had a variable interest rate. But since commercial banks are now charging a higher interest rate, less business and people will be taking out new loans, which is the intended effect of raising the rates, to show down spending.
Most homeowners with a mortgage likely don’t have a variable rate mortgage, so their payments won’t change. Anyone with a variable rate mortgage will be paying more, but that’s the chance you take when taking out that kind of mortgage loan. That extra money you pay goes to the bank like normal. That’s part of the Banks income stream. Some of it may possibly go towards paying off any new loans the bank takes. But more likely it won’t because the bank won’t take out new loans until they loan out more money, at which point they will be charging consumers a higher rate because they are paying a higher rate on their loan.
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