Two thirds of investors fear negative interest rates

2 February 2021 | General

Two thirds (64%) of investors are concerned by the prospect of negative interest rates, research commissioned by HYCM has found.

Over half (55%) are not sure how negative interest rates would affect their financial portfolio.

Giles Coghlan, chief currency analyst at HYCM, said: “More clarity is needed as to whether the Bank of England will need to use negative interest rates, especially now there has been a positive Brexit deal for the UK at the start of 2021.

“For now, we know that Governor Andrew Bailey wants negative interest rates to remain part of the Bank’s ‘tool kit’. Whether they will be deployed is another matter.

“Should investors be worried? My short answer is no. Yes, negative rates could affect rates linked to mortgages, credit cards and personal loans. However, retail investors should not expect to pay interest on the cash they are holding in bank savings accounts as this has not happened in Switzerland which currently have negative interest rates of -0.75%.’

“I’m more interested to see how the pound and FTSE could react to such an announcement and whether this might lead to new investment opportunities. Certainly, a walking back from the use of negative interest rates creates opportunities for short term GBP strength at the very least.”

When it comes to investor confidence, half (50%) of investors are optimistic that the financial markets will fully recover this year from the disruption caused by COVID-19.

This post has originally been featured in Property Wire.