Knowing how interest rates are going to go can be unpredictable. You might think you have an idea of how the economy is going and then something like Brexit comes in and can flip what you knew on its head. Ever since the financial crisis several years ago, we all expected the low interest rates to start to slowly rise. We all imagined that they would carry on raising up and up, as they didn’t have anywhere else to go, did they? But that hasn’t happened.
So while the interest rates are low and putting money into savings isn’t going to be the best thing for you, there are things that you can do to make the most of the low interest rates. Here are some of the steps that you can take.
Get a Fixed Loan
At the moment, unemployment is down and house prices are rising, so lenders are a little more likely to give you a good deal on a loan. So now is the time to borrow, if you’re looking for a mortgage or a car loan, for instance. Then you can capitalize on the low rates and fix a rate for a set period of time. So essentially, you are getting the lowest interest rate possible for what you borrow. Of course, you should do all the sums so you know you can pay it back. But for buying a home, car, or doing home renovations, now could be the time to do it.
Plan on Lower Investment Returns
Having a long run of low interest rates was one of the things that many people put the good stock returns down to in 2009. But at the moment, values of stocks are anything but classed as a bargain. So if you do have investments in stocks and shares, then you need to pretty plan that for the time being, you aren’t going to be getting any bargains, given the low yields that we are seeing. It is looking likely that stocks and shares will keep returning quite a low yield for years to come. It doesn’t mean that it is time to give up on the stocks and shares that you have. It just means putting it into your financial plan that you won’t be getting anything too hefty back.
Pay Off Variable Rate Debts
At a time like this when things are a little uncertain, the main message is to focus on the things that you can control. You can control how much money you spend and how much money you save.
If you have loans or debt on a variable rate, then getting them cleared as soon as possible is a good idea. Though the rate might be low for them at the moment, when it is a variable rate, it could easily skyrocket tomorrow. And you never know what is going to happen next. If you need to, then looking for deals on things like credit card balance transfers can be a good idea.
