Installment loan interest rates have been rising continuously since spring. According to the comparison portal Verivox, the ECB’s interest rate decisions have now also led to an increase “of historic proportions” – and there is no end in sight. This could be dangerous for some borrowers.
As a result of the interest rate hike by the European Central Bank (ECB), installment loans for consumers have become significantly more expensive. “On average, loans are 35 percent more expensive today than at the beginning of this year,” said the comparison portal Verivox. According to its own statements, Verivox has evaluated almost one million financing offers.
At the beginning of the year, installment loan interest rates were still 4.98 percent on the market average – and have since risen to currently 6.72 percent. According to Verivox, the average interest rate actually concluded is currently 4.92 percent, compared to 2.98 percent at the beginning of the year. “Thus, loans in the low price segment have even become 65 percent more expensive,” explains the comparison portal.
“After years of decline, we are now experiencing an increase of historic proportions in installment loan interest rates,” said Verivox boss Oliver Maier. The ECB decisions since July “of course” played an important role. However, the rise in interest rates had started much earlier in anticipation of the turnaround in interest rates. “Installment loan interest rates have been rising since the spring and there is no end in sight. Loans are likely to become more expensive in the coming weeks.”
In view of this development, the Leibniz Institute for Economic Research Halle (IWH) considers an increase in private bankruptcies to be possible. “This could not only affect households with very low incomes, but also property owners who have calculated very tightly and will need follow-up financing in the near future in the wake of the rise in interest rates associated with inflation,” said IWH Vice President Oliver Holtemöller of the “Handelsblatt”.
In July, for the first time in 16 years, the ECB increased its key interest rates by 0.5 percentage points, thus ending the era of negative interest rates. At the beginning of September, the three key interest rates were then raised by 0.75 percentage points each. That was the strongest increase since the introduction of the euro.
