When it rises, however, an increase in rates may discourage prospective buyers from entering the housing market.
2. Personal Loans: Likewise, personal loans and credit cards operate on similar dynamics. Lower rates mean lower monthly payments, enabling consumers to borrow more without stretching their budgets and means increased consumer spending is associated with the economy.
3. Commercial Loans: For corporate customers, low interest translates into expansion and investment. Companies are likely to fund more new projects or employ additional personnel or invest in new technology when the cost of borrowing is low. Of course, the benefits will not only accrue to the business itself but could also result in an increase in jobs created and other economic activities.