Sorry for the delay. You picked a difficult topic. I’ve been thinking about how to tackle it. I’ll see what I can do. I say something like the following in some conversations now and again. Dialectics gives me a broader perspective and helps me to explain why things are the way they are.

Interest rates increase and house prices decrease while monthly mortgage payments shoot up. Imagine you agreed to a mortgage to buy a house at 3% interest. Your fixed rate agreement comes to an end.

The central bank puts up interest rates to 4%. The bank, in turn, adds this to it’s standard mortgage rate of e.g. 3.9%. Now your interest goes from 3% to 7.9% (4%+3.9%). Your monthly payment grows from $700 to $1200. Interest is the same as rent. If you have a mortgage, the bank is your landlord. The law obscures this relationship.

You could afford $700 but you can’t afford $1200. You decide to sell and buy something cheaper. Unfortunately, you’re among thousands of others doing the same thing. Every property under $300k gets sold rapidly. You either put an offer in on the day that is advertised or someone else will. Properties priced under $300k increase towards that limit.

Others can afford the properties between $300k and $450k. They sell their house, take the equity, and add it to what they can borrow. The bank says it will lend $250k. A year before, it would have lent $300k. Fewer people can afford the properties nearer to $450k. The sellers lower the price. Again, towards the $300k mark.

The composition of the housing market and homeowners changes. The poorest of those who can afford to ‘own’ their home are forced to spend more on the privilege. They have less money to spend on consumables. Moneylenders, however, are making the same or more than before on mortgages, even though they are lending less.

But it’s uneven and contradictory. The poorer consumers stop spending so much at the coffee shop, pub, and takeaway. They spend less on clothes. These shops, etc, lose income. They can’t pay off their credit card debt. Some close down. They stop paying the rent on their commercial property. Some landlords default on their commercial mortgages. The banks lose some income.

To stay open, the remaining shops raise their prices to cover the increase in their own rent or mortgage. Customers (the same people in the verge of repossession proceedings) pay the difference. The bank is now lending money to fewer businesses, but it’s income stays the same or increases because those who continue to pay, pay more.

The customers in the coffee shop now expects a lot more. They’re paying $8 for a coffee, they feel entitled to the best service and less inclined to tip. They fight each other for a table and chair in the restaurant. Animosity prevails. The customer-workers struggle against each other and the barista. Social life just became a lot more alienated. Try building solidarity among this lot.

To get any income back that the bank does lose from defaults, they raise interest rates, further driving the cycle of impoverishing the workers and enriching/impoverishing the moneylenders. But whereas the banks win and lose, the workers only lose. Some cannot afford to move or remortgage. They default and their home is repossessed. The bank sells it and recoups it’s loan (most of the time – but things were especially uneven after the 2008 financial crash). If it can’t and goes bankrupt, the state bails out the bank.

When the state hands out money to banks, or like during COVID, people begin to spend more (there is more money on circulation) it will later raise interest rates to slow down spending. But when interest rates increase and spending slows down, the above cycle starts again.

The bank and the customer are dialectically related. The bank doesn’t exist without the customer. In late capitalism, the customer can’t exist without a bank account and some form of borrowing (even if it’s just the promise of an unarranged overdraft). But the bank is constantly trying to take everything from the customer. It is their reason for existing. The bank is the face of the imperialist, the customer of the worker.

Interest rates, as a relation, are a mechanism of and they reveal the transfer of wealth from poor to rich. Anything not taken by your employer is in one way or another taken by the bank. You can’t see this without dialectics; you feel the pinch, you see the holes in your shoes, but you don’t make the connection.

And some of what your employer takes from you, is only taken because they themselves have to pay the bank or they have to pay suppliers who also need to charge more because they are owned by the bank.

By unfolding interest rates as a relation, rather than as a simple number that goes up and down linearly, we can see that it is a microcosm of capitalism.