The stock market winners and losers from negative interest rates

On the other hand, lower rates means companies can access cheaper debt, which they can use to fuel growth. This is good for fast-growing companies with low or non-existent profits as they can use cheap debt to expand and become profitable. 

It could also be positive for stocks because it increases the value of future earnings relative to the lower yields on offer from the bond market. This means it is more worthwhile owning stocks than bonds for future income, which pushes up share prices.

Adrian Lowcock, of fund shop Willis Owen, recommended the £1.2bn Merian UK Smaller Companies fund for investors looking to profit from lower interest rates.

Mr Lowcock said negative rates would be good news for companies with lots of debt, such as airlines and retailers. Utilities such as Severn Trent and National Grid are also packed with debt so may see profits rise if rates go

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How Should Retirees Invest With the Fed Keeping Rates Low?

The Federal Reserve has moved aggressively to establish low interest rates in response to the COVID-19 economic shock, and the public comments from the central bank demonstrate its willingness to maintain low rates long term. Retirees rely on bond interest to finance basic needs, lifestyle, and healthcare costs once they’ve stopped working, so low rates represent a major challenge in planning. With limited room for error, retirement investors need to deftly avoid major pitfalls while considering some shrewd and creative allocation strategies in response to the new reality. 

Falling rates are going to drive appreciation in existing bond portfolios due to the inverse relationship between interest rates and bond prices. Holders of fixed-rate bonds have experienced this boon, but bond yields and bond fund returns are likely to suffer moving forward. Moreover, the interest income generated in savings accounts, money market accounts, and certificates of deposit will also shift downward.

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Negative rates will send us through the looking glass

Private sector banks in these jurisdictions were forced to pay their central banks to keep their money on reserve. Penalising cash on deposit, negative rates were supposed to jolt spending and encourage banks to extend loans, bolstering broader growth.

In reality the policy squeezed banks ­– given their reluctance, fearing mass deposit withdrawal, of passing negative rates on to front line customers.

So bank balance sheets weakened, making them more unstable, and less willing to extend loans. Across the eurozone, as in Japan, countless smaller, regional banks, so important for on-the-ground commerce, have cut lending.

Along with pension funds and life insurance companies, they’ve been forced to shore themselves up by “searching for yield” – given the now deeply negative returns on government bonds and other fixed income investments such institutions need. And that’s driven yet more “mainstream” cash into risky, speculative investments.

So negative rates don’t encourage growth.


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How do interest rates affect debt?

Lower interest rates could reduce your costs, but it may not be automatic. (iStock)

Interest rates are a representation of the cost of borrowing money. While many factors go into determining interest rates, we’re seeing record-low mortgage refinance rates, personal loan rates, student loan refinance rates and more. 

Lenders use several factors to determine interest rates, some of which have been impacted by the coronavirus pandemic. For example, the Federal Reserve cut its federal funds rate, which impacts the prime rate lenders charge their most creditworthy customers, to near zero in March and plans to keep it at that level through 2023. 

Also, inflation has been lower than 2% for years, which has driven down long-term mortgage rates. Depending on the type of loan and interest rate you have, it’s important to know if and how you can take advantage of the current interest rates. Here’s what you need

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Today’s mortgage rates continue to hover at historic lows | October 15, 2020

Our goal here at Credible is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders, all opinions are our own.

Check out the mortgage rates for October 15, 2020, which are largely unchanged, except for a drop in 15-year fixed rates from last week. (iStock)

Based on data compiled by Credible Operations, Inc., NMLS Number 1681276, mortgage rates continue to hover at historic lows. They’ve remained largely unchanged since this time last week, with the exception of 15-year fixed rates.

  • 30-year fixed mortgage: 2.750%, the same as last week
  • 20-year fixed mortgage: 2.750%, the same as last week
  • 15-year fixed mortgage: 2.125%, down from 2.250% last week, -0.125

Rates last updated on October 15, 2020. These rates are based on the assumptions shown here. Actual rates may vary.

To find the best mortgage rate, start

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How Can Senior Drivers Get Cheaper Car Insurance Rates – Press Release

LOS ANGELES, CA / ACCESSWIRE / October 10, 2020 / Compare-autoinsurance.org (https://compare-autoinsurance.org) is a top auto insurance brokerage website, providing car insurance quotes online from trustworthy agencies all over the United States. This website offers car insurance info about different coverage types, available discounts, and money-saving tips.

Age is a very influential factor when determining insurance costs. Seniors, like teen drivers, are considered high-risk drivers. But the reasons are different. However, the elderly can still find ways to lower insurance premiums. Follow the next tips:

  • Take a driving class. Graduating a defensive driving course will help to secure a discount. These classes are don’t cost much and can be offered in-person in a classroom, or you can stream them online. In these driving courses, senior citizens will find out how aging and medication affect their ability to drive and how to deal with certain age-related conditions.
  • Install
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Rosengren Says Pre-Pandemic Low Rates Worsened Current Downturn

Eric Rosengren

Photographer: Andrew Harrer/Bloomberg

Federal Reserve Bank of Boston President Eric Rosengren said the long period of low interest rates before the coronavirus pandemic is contributing to the depth of the current recession.

“The slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult,” Rosengren said in the text of a speech he’ll deliver Thursday at an online event hosted by Marquette University.

“The increased risk build-up, such as the reaching-for-yield behavior in commercial real estate or increased corporate leverage, make economic downturns including this one more severe,” he said.

Rosengren, who previously supported interest rate increases after the jobless rate fell below his estimate of full employment, has long warned of the danger of corporate risk taking. He said the U.S. will have to improve its regulatory framework as interest rates

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Fed Rates Near Zero Didn’t Make These Credit Cards Any Cheaper

MasterCard Illustrations Ahead Of Earnings Figures

Photographer: Andrew Harrer/Bloomberg

U.S. retailers’ credit cards with the highest cost of borrowing kept the same rate in 2020 as last year even as the Federal Reserve slashed interest rates to near-zero, a report found.

Credit cards from Big Lots Inc., Discount Tire and several jewelry retailers issued by Comenity Bank and Synchrony Financial maintained annual rates of 29.99%, creditcards.com said Monday in a statement. Ted Rossman, an analyst at creditcards.com, said two cards from Nordstrom Inc. issued by Toronto-Dominion Bank increased their average rates this year.

Those retailers were exceptions, as most other cards cut rates from last year, according to the report from creditcards.com, an online marketplace and information hub. The average retail rate fell to 24.43% from 26.01%.

Retailers may be concerned about delinquencies during the coronavirus pandemic, and the high rates show the danger of applying for a card without thinking through other

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Mortgage and refinance rates today, Oct. 1: How to take advantage

Mortgage rates will remain low for several years. (iStock)

It’s been months since coronavirus hit the U.S. — and mortgage and refinance rates are still declining. Mortgage rates are subject to change based on housing market conditions, location, personal finance (such as your credit score), and lender. But if you’re looking at U.S. market data as a whole, now is a good time to get a mortgage or a mortgage refinance.

Here’s what you need to know about the mortgage and refinance rates today, your loan options, and how you can capitalize on lower interest rates and save money.

Today’s mortgage and refinance rates

So far, in 2020, mortgage interest rates have plummeted to record lows nine times, and that number is likely to grow. At publication, Freddie Mac reported these average interest rates:

Current mortgage rates, as of October 1, 2020:

  • 30-year fixed-rate mortgage: 2.88% (up 0.02%
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Why breaking your mortgage early for lower rates won’t save you money

A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)
A growing number of homeowners are asking about breaking mortgage early for lower rates (Getty Images)

Record low mortgage rates might make breaking your term early seem enticing, but the penalty costs will wipe out the potential savings.

Variable mortgage rates have fallen over the course of the COVID-19 pandemic, following a string of interest rate cuts by the Bank of Canada. Fixed rates are also lower because of market forces pushing bond yields lower. 

According to Ratehub, mortgage shoppers will find better deals on 5-year variable mortgages at around 1.6 per cent, compared to around 1.64 per cent for fixed. 

Unless you are able to renew your mortgage at more favourable rates, current homeowners are locked out of the potential savings. That leaves breaking your mortgage early.

Online mortgage agency Nesto says there’s been an increased interest in breaking early in 2020, especially in August.

“Before the pandemic, most

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