New home loans – loans now twice as expensive due to the rise in interest rates


New home loans cost an average of 3.33 percent. This is the highest value in ten years. However, the savings return grows more slowly.

The fact that the central bank of the EU has raised the policy rate from zero to 3.5 percent since last year has had all the consequences in Austria. New home loans have increased in price from an average of 1.18 to 3.33 percent compared to January 2022, explains National Bank Deputy Governor Gottfried Haber: “This is the highest value in ten years”.

In concrete terms, households currently have to pay 284 million euros in interest for their home loan instead of 148 million euros per month (+92 percent). Due to the higher risk, banks already charge more than eight percent for consumer loans (see chart on the right).

This applies throughout Europe, but here the rise in interest rates is particularly strong. The reason is the still very high share of variable contracts of 45 percent, which immediately become more expensive with the market. For that reason, current loans were recently increased to an average of 2.54 percent, according to the National Bank.

Savers benefit only to a limited extent from the interest rate reversal. With a one-year commitment, this is about 1.9 percent (left graph). The reason, according to national banker Haber, is that the banks currently have sufficient liquid assets and therefore do not have to attract savers with higher incomes. It is said that it will remain so for a while. After deducting inflation, savings therefore continue to lose value in real terms.

Source: Krone


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