What would happen when the banks increase their interest rate? Here’s a very simple theoretical summary of the relationship between interest rate and securities.REITS might be adversely affected due to the increase in their debt’s interest (so they either have a higher sum to repay as a result or may cut down on borrowing for expansion). That’s why we always talk about NAV and gearing ratio when we look at REITs. On the bright side for those looking to get in cheap, REIT yield would increase when their share prices drop.
To learn more about REITS, I would recommend these 2 blog posts by namely Heartlandboy and Financial Horse:
How to understand REIT jargon when investing in Singapore REITS
5 things to look out for when investing in REITs Bond prices would decrease, because again more people will choose to park money in the bank (risk-free). Bond yields of new bonds issued would increase to compensate as a result …