This Bloomberg Business Week article describes why banks want higher interest rates in 2014.
By lowering its target interest rate to almost zero in 2008, the Federal Reserve allowed the banks to pay much less for the money they borrow to lend…
Banks were able to borrower from the Fed at an interest rate of .25% and turn around and lend in my world of commercial real estate at rates of 3.00% to 4.50%. This allows the banks to build up their balance sheets with income as the cost of funds from the Fed was near zero.
However, with so much competition for loans, spreads narrowed and banks were limited in their profitability. They hope rates will rise in 2014.
When rates rise, lenders will try to raise the amount they charge for loans faster than what they pay on deposits.
Interest rates did rise in 2013 but then the reports of the economy have had many investors sell equities and stockpile their money in treasuries. As more buyers appear in the bond market interest rates fell and we have seen that happen at the end of 2013 into early 2014.
So what about the Saver?
Savers are hurting after a 30-year run during which interest rates fell from a high of 20 percent to near zero, where they have been stuck since 2008. Customers tired of low yields may be quick to seek out competitors…
What does this mean for you? The general consensus is that interest rates are not going up in the near future as the economy has not demonstrated that it is growing. Savers are looking for alternatives. SaverNotes was created to fill this void.
Headquartered in Eden Prairie, MN., SaveNotes, LLC provides a unique alternative to stocks, bonds and CD’s by providing fixed income with high return, while remaining easy to invest.
SaverNotes pays interest to its investors based on a variety of available investment amounts and maturity dates. SaverNotes have no fees or expenses and are available for any Minnesota investor. Current rates range from 3.00% to 6.00% based on terms of two to five years. Investors can also invest through their IRA account.
Regular | $2,000 + |
IRA | $25,000 + |
Term | Interest Rate |
2 Year | 3.00% |
3 Year | 4.00% |
5 Year | 6.00% |
Learn about how this investment fund was made possible through our investment partnerships and our experienced legal, wealth management, banking and accounting advisors at www.SaverNotes.com.