Anschlussfinanzierer benefit from the ECB policy the ECB lowers its key interest rate, to provide the banks with cheap refinancing options. Thus, the money is cheapened. These measures are required to support the weakening economy. The banks get relatively cheap money and pass it on to the company. The money supply in the economy is thus being maintained.
Not only for companies, fresh money is cheaper by lowering the federal funds interest rate – even private individuals can benefit from the falling interest rates, for example when purchasing real estate or other purchases. Conditions for real estate financing in the meantime are at considerably less than 4.00% for an interest binding period of ten years. Is this a way to acquire a real estate almost to rental prices. Ben Horowitz has plenty of information regarding this issue. But this development is interesting not only for new purchases. Real estate loans, which have only a short residual maturity with regard to their fixed-interest bond, can in this situation to favourable conditions extended or even replaced.
Just real estate financier who at the end of the 1990s have agreed to their conditions, huge potential savings arising. At an interest rate differential of nearly 2.00% worth an early redemption. Forward loan offer another alternative to securing the current conditions for the future follow-up financing. It already today signed a loan agreement which is only paid at a later date, for example in three years. Normally offered forward loans with a premium to the nominal interest rate. This fee is the price the Bank for risk requires, if interest rates should rise again. In the current situation is still favorable conditions arise despite these premiums. Some lenders even waive the surcharges. Almost unique opportunities to extend the expiring loans to top interest rates results in for follow-on financing. Interesting is also the fact that the deployment of the forward loan no more Costs are incurred. This means that no additional costs incurred to the forward loan payment. Thus, to secure risk-free future follow-on almost at a bargain price. Up to the time of the loan use also any additional burdens, which could restrict the liquidity situation arise. At the end of the original interest rate on the existing loan, this is simply replaced by the forward loan. This is no compensation, since the expiry of the fixed interest rate the existing loan completely or partly free of charge can be traced back. How long this situation with regard to almost historic low interest rates for home loans continues, can predict course nobody. It is just that with more appealing economic the ECB will again raise its key interest rate. So, she will try to deprive the financial system funds to reduce the amount of money located to circulation. This step will be required, a strong inflation to avoid. This will be relatively quickly, minimizing inflation the ECB belongs to the tasks highest priority in terms of. The ECB will try to limit inflation to 2.00% per annum. The increase of interest rates will be to what extent, is capable of also still no right to be able to assess. If you look at the speed with which the rate cut took place in recent months, one can assume that the rise in interest rates could be also relatively quickly. Those who play with the idea of ensuring their follow-up financing should be therefore not all too much time.