Make money by credit: The crazy new world of interest

Cheap interest rates are only available for home loans, not for ordinary, unsecured personal loans.

For the first time, you have to pay less interest than you get for saving for loans. This is a reversal of the normal situation. so can make money?

The world interest rate in Germany is completely confused. “We have been 25 years in the business, but this is something we have never experienced,” said Falko Schoening and Torsten Daenert, senior manager of Commerzbank. The interest rates are not only lower than ever since the Federal Republic of Germany. There is also the crazy situation that interest rates on mortgage loans in some cases are lower than the savings interest.

This is quite exceptional and a reversal of the normal situation. For the first time, you have to pay less interest than you get on savings deposits for loans. Banks usually take customer deposits against interest contrary and give it to a higher interest rate than credit further. The distance is net interest income, of which they live. Therefore, there was a long year for savers two or three percent on the savings account – but for a loan had to pay six, seven or eight percent interest.

Now there is an inverse interest rate differential. Barely within a bank such as Commerzbank manager Daenert says – obviously but between different banks. Tables with interest rates as of the FMH financial advice in Frankfurt (see graph) show that you can get a mortgage for ten years now already for 2.39 percent. And that there are banks that pay proud 3.8 percent a year for fixed-term deposits with the same maturity.

The lending rates are lower than the savings interest. :

Two questions arise: How come? And: Is it worth for investors to borrow cheap money and to invest it at higher interest rates? Hans-Peter Burghof, professor of banking in Stuttgart, gives two reasons for the strange phenomenon: The policy of the European Central Bank – and the consequences of the financial crisis. “Banks that have weathered the crisis, and insurance companies that do not want to buy as many government bonds, have at the moment about a lot of liquidity,” says courtyard. In addition to smaller providers at the top and German Bank and Allianz belong to this group. “They’re looking for a safe haven.” This is one reason that it has awarded favorable mortgage loans.

On the other hand, there are banks whose main problem is a lack of liquidity is – because the banks themselves are no longer so fond of borrowing money and they also have to pay relatively high interest rates on the capital market. That is a reason for some foreign banks, but also for crisis losers from Germany, with (relatively) high-interest rates to woo retail deposits in Germany. Even banks that are less well known, must currently pay higher interest rates to seem to come in deposits.

And you can make the advantage as an investor? At least it’s interesting, that play through once mentally. It’s obvious. But the whole is associated with certain risks.

You need: A house and a bank

To get a cheap loan, you need on the one hand a house that is already paid off and you can borrow. Finally, there is the cheap interest-only home loans, not normal, unsecured installment loans. And you have to find a bank that is a credit too low on this house conditions without requiring that you build or modernized with the money.