Interest rates will hang around where they are for a long time yet even though the market has booked a cut for March next year.

I say this because most economists, at least those asked by, expect that’s about when they might start rising. Split the difference and the most likely course is that rates will do nothing for at least another year.

Mind you, they’ve been moving of their own accord without divine – oops, I mean – Reserve Bank intervention. And that’s down, except for investment loans which are a special case. Outside the big banks, lenders such as ME have given almost two rate cuts since the last official one in May on owner-occupied loans.

If you’re a borrower and haven’t noticed a cut of late, I’m afraid there’s a good reason. You weren’t given it. Lenders are trying to quarantine their generosity to new borrowers only.

So to share in the spoils you’ll have to threaten to move your debt elsewhere. Hint: the cheapest loan is 3.79 per cent from Mortgage House. Other lenders are offering a $2000 cashback to re-finance and NAB will give new customers 250,000 frequent flyer points.

Fixed rates should be on the way down too due to an odd kink in bond yields which reduces lenders’ longer-term funding costs, so go half each.

Weird as it sounds banks can raise three-year money at 2 per cent, but it will cost them 2.25 per cent if they only want it for three months.

A rate flip like that can spell trouble. It suggests weaker economic growth because there’s less interest in borrowing.

Unfortunately, there are plenty of forecasts for this too, the latest from the IMF. Even then its forecast of 3.6 per cent global growth next year, most of it featuring our biggest trading partners, would be the best in five years according to CommSec’s chief economist Craig James.

It should be said that, in those five years, its economic forecasts kept over-promising and under-delivering, but the point is officialdom is less worried about China than the markets.

For its part, the Reserve Bank doesn’t seem overly concerned either. It says the US is strengthening as China softens, though I doubt it’s suggesting a link.

And by governor Glenn Stevens’ account, confidence here is improving. The Aussie dollar is competitive and there are signs of life for non-mining business investment, even if housing is finally slowing.

Needless to say, deposit rates have been on the skids too. A one-year term deposit is a full rate cut below where it was after the Reserve last cut.

One hope for savers is that the US Federal Reserve fortifies itself and raises rates, as it has said it wants to, sometime soon.

Because that would ricochet through global money markets, forcing banks to turn to local savers by offering a bit more on deposits.

In which case it’s best to stay short, or at least have a cocktail of different term deposit maturity dates to keep ahead of the game.

Even at these depressed levels term deposits are about 0.65 percentage points higher than the Reserve’s official cash rate which is highly unusual. So there’s no room for progress there I’m afraid.

Posted by David Potts – Money Manager (Fairfax) on 13th October, 2015