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The pros and cons of the rise in interest rates for the Spanish economy.

The ECB has raised interest rates nine times since 2021, reaching 2.25% in June 2023. This increase makes credit more expensive and makes access to housing more difficult, especially for young people and low incomes. According to market studies, the average price of housing in Spain has risen 3.5% year-on-year in the first quarter of 2023, and the financial effort to buy a home stands at 34% of income. Rising interest rates affect young people and low incomes in several ways:

  • It makes credit more expensive and reduces borrowing capacity, making it difficult to access housing or other consumer goods.

  • Increases the financial effort to pay mortgage installments with variable interest, which can cause defaults or seizures.

  • It decreases savings and investment, which reduces the opportunities to improve the economic situation or to create a financial cushion for unforeseen events.

On the other hand, it can also have some benefits, such as:

  • Curbing inflation and excessive borrowing, which can improve long-term economic stability. Increase the profitability of fixed income assets, which can benefit conservative savers and investors.

  • Sign of confidence in the economy and stimulus to spending and consumption.


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