Why Do Interest Rates Vary Among Countries?

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Interest rates can vary among countries because banks borrow money based on rates that are set by their own federal governments. Discover how different economic factors can affect interest rates with help from a financial specialist in this free video on interest rates and loans.

Part of the Video Series: Interest Rates
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Video Transcript

Hi, this is Matt McKillen, with Innovative Financial Group. I had a very interesting question posed today, why do interest rates vary from different countries. Generally, the way the banking system works in The United States, for example, is that, you know, the banks are borrowing money based on a set rate by the federal government and the, and the Federal Reserve. When you go to different countries usually there's some type of government control on the banking to protect all the the citizens of that country. So, the rates can vary from country to country because they may just have different economic factors that are determining what those banks are able to borrow the money at. So for example, if you're in Canada, and the banks are borrowing money more on short-term the rate may be higher when they offer rates to their citizens. I know, for example, in Canada it's very difficult to get a thirty year fixed-rate loan. Most people have to go and renegotiate every ten, fifteen years. So really, it just comes down just to the the the government set-up, and what the cost of money is for those banking companies within those countries. My name is Matt McKillen. I'm with Innovative Financial Group.


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