Negative Interest Rates?!

Negative Interest Rates?! It’s not what most think

Negative interest rates? You heard that correctly. No, you don’t have to turn up your volume. In fact negative interest rates in the U.S. are here. (CNBC article). While you most likely will not see this economic anomaly mentioned on your local or national evening news, financial outlets have assiduously reported on central banks around the globe who are now pulling out all the stops in the effort to stimulate the economy. The European Central Bank, Sweden, and Germany currently are in negative interest rate territory and the U.S. may follow.

Does this mean the banks will pay you to borrow money? Not quite.

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The Cynic December 21, 2020 at 11:57 am

It is odd to read and hear that Ginnie Mae was the one to reach out to our industry. Why wasn’t the industry reaching out to Ginnie Mae for relief?

As to negative index interest rates, the question is who is receiving the interest on the negative rate? If not the borrowers, Is it the central banks? Also who is setting the negative rates? Negative rates are easy to work with if there is general consensus on the margin so that a yield spread premium still exists but due solely to the margin (which is generally the case anyway). So who really benefits in a negative index rate world/

Guy Schwartz December 21, 2020 at 2:40 pm

Always good information, thank you for doing these videos.
Happy and Healthy New Year


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