J.P. Morgan: Households are less sensitive to interest rate rises

J.P. Morgan: Households are less sensitive to interest rate rises

13 december 2021

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If booster vaccinations prove effective at preventing most Omicron related hospitalisations then the US and UK are likely to see interest rates start to rise over the next year.

However, we don’t think that higher interest rates will cause a problem for most households. That’s because the number of households with floating rate mortgages has declined substantially compared with the past. With most mortgages now fixed, higher interest rates won’t be felt by most households, at least for the next couple of years. So if the booster vaccinations work and that leads to higher interest rates, then the economic recovery shouldn’t be derailed.

Adjustable / floating rate mortgages as a % of all mortgages

13122021 J.P. Morgan

Source: Bank of England, Mortgage Bankers Association of America, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 10 December 2021.

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