The Price of Money

And so of everything else

Let’s start with the conclusion

If you buy a BD 100,000 house with a 25-year mortgage loan at 5%, you pay around BD 75,000 in interest over the life of the loan. At 6%, it’s BD 93,000 — almost BD 20,000 higher (!). For large sums of money over long periods of time, even seemingly minor changes in interest rates really matter.

Some background

Taking a basic macroeconomic perspective, interest rates come in two sizes — short- and long-term. Central…