Interest Rates - Are they my friend or enemy?
At the moment, for the first time in my life, I don't know the answer to this question. It used to be so easy. I used to watch and hope for declining interest rates. Every day clicking in to my bank or news sources and looking for the dips in rates. Each time the news blared "Feds lower rates" I secretly jumped for joy.
Now, my secret joy is more like an okay moment.
After meeting with our banker, to re-up our commercial line for the business, which has again hit the bottom for rates, we talked about a couple more stable commercial notes. The ones that adjust every 5 years. The ones that are on our investment real estate properties.
I have to say I'm excited about the promise that comes from the rate cuts.
Our banker to it to committee and our in house commercial loans will see a rate cut. One will slide down by .75% and the other will slide down .81%. This equates to about $60 per $100k loaned - saved. If we so chose to enjoy the lower payments.
History dictates, that we never do.
Both my husband and I feel you should maintain the higher payments and slam the principal down, while the rates are low. Tomorrow they could blast like all those tin machines at Kennedy Center.
These adjustments will cost us $100 each.
I'm okay with that $200 expense. I will save over $240 in the first 30 day period. If we chose to do so. This would make the entire adjustment FREE.
So as you can see, the lower rates aren't all bad.
Until I open my savings accounts. You know, the ones I finally have working out there for us. My interest only went up 15¢ yesterday, from Thursday. This after the IRS put in that pretty little stimulus. I'm so stingy - I want more!
This will only be $4.50 extra for the month.
As our situation improves and alters from a Debt Position to a Wealth Position, I'm expecting rate drops to turn into nightmares. No more jumping in excitement.
2 comments:
For retirees, rates are their enemy. 5% one year CDs are about the happy medium. So $240K will give them $1000/mo in interest. At 3%, that drops quite a bit.
For those in debt, it's an opportunity to save a lot of money. I started in 1996 with a 7-5/8% mortgage (30yr fixed) and after many refinances, am at 5.24% with less than 7 years to go. My year end interest paid is less than half what it was in '96.
Joe
You make a great point about the opposing benefits of falling interest rates. All of my debt is at fixed rates so I hate all these cuts! I am just hoping that mortgage rates really fall because I will refi if it hits 5.4%.
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