How Interest Rates Affect the People Essay Example | Topics and Well Written Essays - 1250 words

How Interest Rates Affect the People - Essay Example An article was presented in the media by the Austin-American Statesman which is a part of the COX Newspapers group. The title of the Article was ‘Nasty surprise may await homeowners with adjustable mortgages’ and it was written by Susan Tompur. Basically, the article discusses how rising interest rates could negatively affect homeowners who have adjustable rate mortgages. If their interest rates rise high enough, they may not be able to make payments on their mortgages which could lead to a situation of foreclosures or for them seeking cheaper housing options. While the article considers the situation in a rather simplified manner, the real connection between interest rates and the housing market is quite complex since the setting of the interest rate is dependant on several things such as the monetary policies of the government and the direction of the economy. On the other hand, the housing market itself depends strongly on supply and demand as well as the relation to mortgage interest rates or housing finance products which are created by banks or offered by other lending associations that deal with the housing market.