Whereas property prices fell steeply during the subprime mortgage crisis as an impact of the global financial crisis, increasing interest rates may be a good thing as an indication of economic recovery.
In a report by Florida Realtors, borrowing costs have started to rise to the disadvantage of investors including house purchasers.
For most economists however, this trend is a reassuring one. They surmised that the rates will not increase fast or high enough to stifle or damage the economic recoveries in the United States or Europe. The current rise of interest rates will inflict only a short-term pain.
The optimism expressed by economists stemmed from the fact that rising rates are a healthy sign of a growing economy. This essentially means that U.S. and European economies are going strong. Interest rates are increasing because there is growing demand for people to borrow or spend money. This is comparable to the low consumer spending in times of recessions.
In a similar report by the Tampa Bay Times, "There is an economic normalization taking place around the world, " according to Eric Lascelles, chief economist at RBC Global Asset Management.
While businesses and consumers will cope with fairly higher loan payments, people who depend on interest income from savings accounts or certificates of deposit will receive higher rates offer as well. The loss of some will be a gain of some.
Federal Reserve analysts anticipate that short-term rates will be raised from record lows this September and further increases will be phased gradually.
Longer-term rates on the other hand, will essentially be determined by investors. They will remain low as long as inflation is kept under control and economies remain robust and investments by and large secure.
The improving or normalizing economies in the world can be seen in many economic indicators.
The 19 economies using the euro currency post a collective growth of 1.5 percent this year. The decrease in oil prices and in value of the euro made European goods more affordable overseas.
Japan's economy also promises a 1 percent growth this year according to IMF after a sudden recession late last year.
The IMF also expects an expansion of US economy by 2.5 percent this year.
