Interest rates represent the price of money and are established as a result of supply and demand in the market. Thus, in a loan we can say that the interest rate responds to the extra amount that a person or company must pay for having financial liquidity during a temporary space.
In these cases, it is also necessary to add to the financing operation what are considered the “risk premiums” for a bank. They also define their benefit thanks to the use of complementary indices in the operation such as the Euribor.
There are four types of interest:
A rise in interest rates hurts those who have mortgages with variable interest, since they will pay more in each monthly installment, and financing for companies will be more complicated.
On the other hand, within a bullish situation, small savers who purchase savings products with fixed remunerations, which in recent years have been almost non-existent, and also those who purchase government bonds, benefit. In addition, from business lenders.
According to the criteria of The Trust Project
