Why are interest rates rising and how does it affect my mortgage?

Interest rates are going up because money lenders want more money for their borrowed money, like when you ask to borrow a toy from your friend and promise to give it back later, but now you have to pay extra to get that toy.

Imagine you run a lemonade stand. If you borrow cups from your neighbor, you might say, “I’ll bring you more lemonade tomorrow.” That’s like a loan. Now, if the weather is great and everyone buys lemonade, your neighbor might say, “Great! I’ll let you borrow cups for less money, maybe even free!” But if it rains all day and no one comes, they might say, “I need more money now, so you have to pay me a bit extra.” That’s like interest rates rising.

Your mortgage is like a big lemonade stand loan. When interest rates go up, it means your neighbor (the bank) wants more money for lending you that stand. So now, every month when you pay back the loan, you’ll have to give them a little extra, just like paying more for those borrowed cups.

If you already had a mortgage and rates went up, you might feel like you’re paying for a rainy day even when the sun is shining, but don’t worry, it’s just how the lemonade stand (or your house) works!