When I bought my home seven years ago, I was delighted to take advantage of interest rates that neared record lows. Well, here we are seven years later, and interest rates recently hit a 50-year low! That's right -- 4.58% for 30-year fixed-rate mortgages, on average.
As long as low rates last, they're obviously good for borrowers, and not so good for savers. But as investors, we should be thinking about which companies stand to benefit or suffer from low rates.
If our economy were firing on all cylinders, abundant construction would pump up profits for companies such as Home Depot
In addition, low rates will keep trouble at bay for many variable-rate mortgage holders, enabling them to keep making their payments. This could keep defaults down for Bank of America
These extra-low rates may also entice more people to refinance, which can give them more money to spend on remodeling -- or simply on other purchases that can give the economy a little boost.
Companies can also refinance. Last year, TD AMERITRADE
Interest rate-changes can have a big effect not only on your bank balances, but also on your portfolio.
Enough about stocks! Learn how interest rate changes will affect bonds.