Neither a lender nor a borrower be: Rates are low right now

By | February 22, 2010

You’d be forgiven for thinking interest rates were rising! I had thought that many of the governments would start raising interest rates in the summer, but so far only a few countries have actually raised interest rates, including Australia.

Despite increasing production and exports in many Asian Tigers, the local interest rates have stayed at rock bottom levels for over a year. I’m thankful for that because it means on the one hand that my mortgage payments are pretty small.

However, since we have accumulated a fair amount of cash in the banks, both base rates and cd rates have stayed super low over the same time period. A $10000 deposit currently earns little more than $100 per year (approx. 1%) in the fixed rates or floating rates type deposits.

It’s pretty difficult to get any more out of the banks, as they seem to be unwilling to attract additional deposits at the moment. The Bank of Taiwan website has lots of economic stats available. But the economy in Taiwan is beginning to show overheating warning signs, though rates haven’t yet increased.

I can remember rates being over 4%, and our mortgage payments being nearly 50% higher than they are now. So I guess overall, I’m doing quite well with the savings approaching NT$7000 on that alone. Costs of lower interest rates are about 25% of that, so the overall saving is less.

So, savers and borrowers, this is a good time to be repaying mortgages as much as you can or borrowing short-term. Interest rates will never be as low as they are now, for sure.