Interest Rates, Inflation and Real Estate: Reading Notes

Looking at interest rates in isolation, rate hikes would increase mortgage costs and dampen real estate transactions, turning property inventories into the so-called "bubble." But if inflation really arrives, real estate prices would only surge, unaffected by marginal rate increases. On their own, rate hikes mean higher interest earnings for depositors. Yet if inflation hits, those trivial rate gains can't make up for the losses from currency depreciation. Seen in isolation, rate hikes might help cool loan-fueled investment. But when inflation looms, combined with the reality that borrowers can secure loans through administrative connections or personal networks and even walk away from repayment, rate hikes simply can't rein in the so-called "overheating." #ReadingNotes#