Saturday, Mar 12, 2016
One for libertas
"How could low or negative interest rates make mortgages more expensive?
One answer, according to banking analysts, is that when rates fall to very low levels banks start to bear costs relating to the money they hold on deposit.
In a negative rate environment, deposits present actual costs.
It is difficult to pass these costs onto depositors.
In fact very few banks, even in countries like Switzerland where negative rates have prevailed for some time, pass any cost directly to savers.
Instead to protect their profits, banks have to increase the charges they levy upon borrowers."
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