- Interest will stay low
- Don’t listen to pundits in the media
- Rates might even go negative in 2019
We have always subscribed to the thought that interest rates are going to bounce along the bottom and maybe even go negative in the years ahead. Infact, probably for the next decade up to 2030. Last year when rates rose a little, we had a another quick look at the data and still thought rates would stay low, but were a little less sure. Now having looked at it all again, we are. Rates will stay low and may even go negative in the next 3 years.
It won’t surprise many but we aren’t with the mainstream when it comes to our predictions of lower rates. That’s usually a good sign though because if there is one thing the mainstream is good at it is getting things completely wrong. Our predictions are well known for their accuracy and all are documented in historic snapshots of this site.
What makes us think rates are going lower?
There is no sign of inflation rising, credit is starting to dry up and spending is falling across the country. This will lead to even more deflation, something the Government is terrified about. The other major indication is that banks are trying to offer fixed rates whilst at the same time telling people that rates are about to go up.
Why would banks lock in people on low interest rates if rates were about to go up? They wouldn’t of course; it would cost them a fortune. We’ve learned over the years to do opposite from what the banks are telling people to do.
Currently banks are allowing borrowers to lock in their rates for 10 years at around 3.9%. On one hand it is scandalous that they are allowed to get away with this, but sadly there is little competition in the market due to the barriers to entry that others face. If we could get into the market place then we’d like to offer rates at 2.7% for a 10 years fixed.
Anyway, rates are staying lower and when you come back to check this site in a few years. You will see that we were once again spot on.