Sep 22 2010

Really low interest rates…a bummer or a blessing?

Now that I have a few dollars to rub together in my pocket, I want that money to earn interest. When I opened an account with ING Direct several years ago, it was paying more than 4% interest. In recent years, some banks offered 5% on savings accounts!

These days, ING is offering a puny 1.1%. Whoop-de-doo. Still, better than nothing, right? And it’s definitely better than paying 1.1% interest (or more) on a loan.

When the savings account interest rates were high, I don’t think I ever had more than a few hundred dollars in the bank at one time, so I never earned much interest anyway.

So on one hand, I’m sorta bummed that there’s no relatively safe place for my money to earn any respectable interest in the short-term.

But on the other hand…have you seen mortgage interest rates lately? They are fantastic. On Bankrate today, the site shows 15-year mortgages can be had for 3.84%. A 30-year is at 4.34% today. Wow.

These rates are comparable to what some savings accounts were earning just a short time ago.

It doesn’t appear that the Federal Reserve is poised to raise rates any time soon. Raising rates would mean more expensive mortgages, and more interest earned in our savings accounts.

I’m hoping that we are able to move in the early spring or summer of next year and buy a house shortly after. If we luck out, mortgage interest rates will still be low.

And once we get a house, then I’ll be happy if interest rates start to go up again. Gotta earn some money on that savings account!

What are your thoughts on the interest rates today? Ok or stinky?



5 Responses to “Really low interest rates…a bummer or a blessing?”

  1. Good luck getting one of those rates that are quoted. I don’t know who gets them but none of the banks in my area are anywhere near that low.

  2. How much lower can rates go for mortgages? Sometimes it seems like people keep waiting for lower home prices and or lower mortgage rates. Maybe if interest rates started going up people would not want to miss the boat on low rates and start buying homes again.

  3. Since I’m hoping we can move on a house in the next year, I still say blessing. Ask again after we lock in a rate and I’ll probably say curse. :)

    (To echo Pat’s comment, about a week and a half ago or so one of the local WV/PA banks we visited quoted about 1% higher than you’re seeing. I still thought that was good though.)

  4. I am feeling really lucky this month because we just snagged the ideal scenario you’re talking about: we just found out we’re NOT underwater on our house even though we live in SE Michigan, because the house appraised for 45k more than our realtor thought it would, and we locked in a really low refinance rate we will be closing on next month. Our savings account interest rates are terrible, I know, but they will go up. Our mortgage rate will not! My friend says this is a very “grown-up thing to be excited about.” Darn straight it is! :) Best of luck to all of you out there who are also in this situation and still waiting for a refinance or looking for a loan.

  5. Stinky for me. I have savings making only .6% to 1.1% while I am stuck with a 7.5% mortgage rate. I’m too close to paying it off for refinancing to make a difference. And house sales are too slow to put my house on the market. But I am grateful that I am in good shape financially and have a secure job.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

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I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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