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A Silly Question ?

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How do increasing interest rates stop prices increasing ??

Hey, they don't stop it, but the increase in the rates effectively makes borrowing more expensive and therefore raises the cost of acquiring assets. This helps to reduce demand for lending and so as a consequence, assets/houses will need to be offered at cheaper prices to encourage people to commit to more expensive loans. Also the increase in rates encourages people to save money instead of spending it, which again reduces the demand for assets/houses.

I'm not expert but hope this helps.


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I believe also that it strengthens the local currency making it cheaper to buy imported goods and thus reducing the effective cost of products?

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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