Are low interest rates a good thing?

Are low interest rates a good thing?

As a saver without a mortgage, I’m all for rising interest rates.

But overall, I can’t help but think that overall, maybe low interest rates are actually a good thing.

After all, how much are you ever really going to have sitting in a savings account? Long term money is going to be put into stocks, etc.

On the flipside, the biggest purchases you’ll ever make are likely to be materially affected by interest rates. Property. Cars. (yes, in a perfect world we’d all only ever pay for cars in cash, but we don’t live in a perfect world). If you borrow money to start a business. If you have a student loan (and leave New Zealand, incurring interest – or live in a country when student loans are never interest-free).

Just a stray thought.

3 thoughts on “Are low interest rates a good thing?

  • Reply Mario October 14, 2014 at 09:02

    Hmmm. I guess it depends on how you look at it. I think that everyone pays or earns some form of interest on every bit of capital they have, whether it’s the rent you get from renting your property, rate on the mortgage you lent out, interest your bank pays on your deposits, dividends on your stocks, etc. — and they’re all tied to the policy rate. So from a purely personal point of view (never mind the effect of monetary policy), low interest rates are a good thing for people who have a negative net worth (like me!) and a bad thing for people who have a positive net worth.

  • Reply Newlyweds on a Budget October 14, 2014 at 09:17

    I’m hoping low rates stay around for at least another year or so as we get ready to buy a house. It would be nice to earn more in savings, but I highly doubt that you’d earn anything close to what you would save on a mortgage with low interest rates.

  • Reply Genie October 14, 2014 at 09:35

    Low interest rates will benefit the vast majority.

    …Just not me. I have no debt. No student loan, no mortgage, no credit card debt. I have a little bit of savings, which occurs interest but hardly anything to get excited about.

    I’m curious what’s the average debt of a New Zealander?

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