The ECB lowered its key interest rates in June, and savers are feeling the impact on their overnight and fixed-term deposits. The situation is different for loans. The ECB’s decision on Thursday will show what happens next.
Savers are receiving less interest on their overnight money from banks than they did just a few weeks ago. However, interest rates on real estate and installment loans have not fallen recently, according to an analysis by the comparison portal Verivox.
National banks paid an average of 1.69 percent (as of July 15), while at the beginning of June it was 1.72 percent. Savings banks (0.62 percent) and regional cooperative banks (0.64 percent) paid significantly lower interest rates on average, and there too the interest rate fell slightly.
Downward trend also in fixed-term deposits
“Many banks and savings banks quickly passed on the European Central Bank’s (ECB) latest interest rate cut to savers,” said Verivox. In June, the ECB cut interest rates in the eurozone by 0.25 percentage points for the first time since the wave of inflation. According to Verivox, at least 64 credit institutions have reduced overnight interest rates since the beginning of June. That is around eight percent compared to the 765 banks and savings banks examined. Interest rates, however, have only been raised at four financial institutions. Verivox regularly analyzes overnight and fixed-term deposit interest rates for an investment sum of 10,000 euros.
According to the comparison portal, interest rates on fixed-term deposits also continued to fall moderately: the average interest rates for nationwide offers with a term of two years fell from 2.82 percent at the beginning of June to 2.79 percent. In November they were still at 3.39 percent.
What will happen to the conditions for savers depends largely on the ECB’s monetary policy. It will decide on the key interest rates this Thursday.
No relief for home builders
The situation looks less positive for debtors. There has been little movement in building financing since June, according to Verivox. Interest rates for loans with a 10-year fixed interest rate were recently at 3.71 percent and 3.85 percent for a 15-year fixed interest rate. In the coming weeks, building interest rates are likely to remain stable, says Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH. The ECB’s interest rate decisions only have an indirect influence on building interest rates, as they are based on the yield on ten-year federal bonds.
For installment loans, Verivox even recorded a slight increase in interest rates to an average of 6.89 percent. This is because several banks have relaxed their criteria for granting loans following the ECB’s interest rate cut, says Maier. This helps consumers with relatively poor credit ratings. “Because of the greater risk, however, the banks charge comparatively high interest rates on these loans.”
Source: Stern
