eli5 Where does all the extra money from fed interest rate hikes go?

Question

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?

In: 67

Answer 1

It goes to the banks that issued mortgages. Fed’s rate hike is the hike in the rates banks pay the government in the future to borrow money. What banks charge for mortgages is up to them.