Banking

BANKING: Interest rates remain low, but are bound to rise

Times Board of Economists - Report from David Rose, president of Northwest Indiana Market for Horizon Bank
2014-05-04T00:00:00Z 2014-05-04T07:52:07Z BANKING: Interest rates remain low, but are bound to riseJoseph S. Pete joseph.pete@nwi.com, (219) 933-3316 nwitimes.com

Interest rates remain low, making it an ideal time for businesses to borrow money to expand or acquire other companies, said Horizon Bank executive vice president David Rose.

The Federal Reserve plans to increase rates if unemployment goes under a certain percentage, but has been reluctant to take any steps that would slow economic growth.

"The cost of funds is low," he said. "It's virtually zero."

A recent Bankrate study however found 73 percent of consumers would rather collect little interest from a savings account than get into the stock market, Rose said.

"People want safety versus return," he said.

Low interest rates encourage investment but harm seniors on fixed incomes, because they cannot rely on as much interest income from their savings.

Banks are seeing improved balance sheets because loan quality is improving and real estate values are rising, Rose said.

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