Due to the sharp rise in interest rates of the European Central Bank (ECB), savings products such as the classic construction saver are becoming attractive again. According to an analysis by the comparison portal Durchblicker, customers currently receive a fixed interest rate of three percent or more for a home savings contract for the first 12 months. After that, variable interest rates of up to 4.25 percent are possible.
Even for savings deposits with an annual commitment, interest rates of up to 3 percent are currently possible. According to durchblicker, this is about a third more than half a year ago. Accordingly, the demand for building depositors and savings accounts is also increasing sharply. In January, three times as many home savings contracts and six times as many savings contracts were concluded via the portal as in January of the previous year.
The Raiffeisen Bausparkasse also registered a significant influx of customers. The number of new home savings contracts almost doubled at the beginning of the year, director Christian Vallant told the Salzburger Nachrichten on Thursday. Vallant expects the trend towards home savings to continue in 2023. He also believes that interest rates are here to stay – even if key medium-term interest rates were to fall again.
Room for improvement in savings rates
Martin Spona, head of consumer finance at durchblicker, sees room for improvement in savings rates in the coming months – especially against the backdrop of the ECB’s next rate hike, expected on Thursday. Spona therefore advises against entering into longer-term commitments in savings contracts.
Borrowing costs are rising
Although savings products are yielding money again thanks to the ECB’s interest rate hikes, the downside of rising interest rates is that borrowing costs are also rising. According to Durchblicker, a minimum of 3 percent interest must currently be paid for a variable-rate home loan. This means that floating rate real estate loans have become more expensive by half since the end of the year.
On the other hand, the conditions for fixed-interest loans have improved slightly. For a fixed-interest home loan with a term of 20 years, the interest would now be at least 3.45 percent. According to Andreas Ederer of durchblicker, the more attractive terms are a response to the declining demand for real estate loans. Because fewer and fewer households could afford a home loan in the current environment and “this trend will continue in 2023,” says Ederer.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
