Question

higher cost of borrowing is a burden

Answer 1

The visible signs of inflation are higher prices at stores, higher salaries, higher costs for services and higher housing prices. However, inflation is actually the decline in purchasing power of the dollar due to an oversupply of money in the monetary system. Consumer and business demand for goods and services prompts increased borrowing to finance those purchases, and borrowing increases the supply of money floating in the system. Goods and services are limited to how much can be produced by existing businesses, so when there is too much money chasing relatively limited supplies of goods and services, the purchasing power of that money diminishes -- meaning that it takes more money to purchase the same amount of goods or services.

Loan Interest Rates
Interest rates on bank loans fluctuate based on the demand for money and on Federal Reserve monetary policy. A large demand for loans prompts banks to raise charges for that money, so borrowing rates rise. Think of the loan as a product and the interest as its price. When inflation diminishes the buying power of a dollar, it takes more dollars to buy any product, including loans. Investors require higher interest from bonds for the same reason. Since mortgage rates are commonly based on the market rates of certain bonds, when bond interest rates rise, mortgage rates also rise