Interest rate is an important factor in the economic world. The government usually lower the interest rate to reduce savings and stimulate the economy through increased investment. It means that the mortgage payment will also go down and people will increase the rate of consumption because they have extra cash. So, it is clear that reduced interest rate has different ways to get the economy going again. The lower interest rate will also encourage people to apply for various types of loans. The lower interest rate should also help to expand our portfolio through increased participation in different investment platforms. However, we should know that interest rate would not stay lower forever and we need to be prepared before that happen. Credit cards payments will be affected by the higher interest rate. So, while the interest rate is low, we should pay off credit card debts in full. It doesn’t make sense to let the debt piles up when the interest rate is low.
When the interest rate is low, we could also do something with the fixed term mortgage. If we are sure that the interest rate will stay low for many years, we may transfer the fixed term mortgage to the variable rate variant. However, we should know whether there’s a penalty for doing this. If we are applying for mortgage, then it makes sense to choose the variable rate mortgage. It may seem like a common sense to choose fixed rate to protect us against sudden rate increases, but it may not be a good choice if the rate will be lower for years to come. People who have variable rate mortgage should be in an advantageous position and they should ask how to pay more. As an example, they may reduce the period of the mortgage, so they will be able to pay off the debt quickly. People who are renting should ask the landlords for lower monthly or annual payments, because the overall costs are low.
As consumers, people should look for ways to get benefits from the lower interest rate. When the interest rates go up, people who have a lot of debts will need to pay more each month. The government adjust the interest level based on a whole spectrum of economic factors. We should be able to predict whether the interest rate will stay low or not. Low interest rate would only provide us with pitiful amounts of cash every month, so it is better for us to invest our financial assets in calculated, medium-risk platforms. We only need to work a bit harder, so we will be able to gain enough profit from our savings. There are different things that we can do depending on the current financial conditions. We shouldn’t feel that we are stuck in the current situation. If we see everything in a negative light, we may not be able to obtain the proper solutions. So we should use common sense and hope for the best.
