With another juicy increase in the key interest rate by the ECB from 0.75 to 2 percentage points, the prospects for savers are improving more and more. However, in return, loans are becoming more expensive, which is particularly noticeable in real estate financing.
The European Central Bank (ECB) has again reacted to the high inflation rates in the euro area and increased the so-called main refinancing rate by three quarters of a percentage point to 2 percent. And: The Governing Council of the ECB “assumes that it will continue to raise interest rates”. The next council meeting will take place in December. That sounds good for savers at first, after all, there have been complaints about zero and low interest rates for years.
However, many people are not only savers but also borrowers. Real estate buyers in particular have benefited from the fantastic conditions of recent years when financing their properties. Even if that drove up demand and – because of the limited supply – prices.
And without those who welcome the ECB’s move to spoil the mood, it should also be mentioned that inflation rates in the euro zone are at a record high of 9.9 percent and in Germany at 10 percent. As a result, interest rates are still very negative in real terms. But the end of tiresome custody fees is near. According to the comparison portal Verivox, around 30 banks are still showing negative interest rates for private customers.
Various comparison portals have taken a critical look at what the increase in key interest rates means for consumers. The areas of construction financing, investments, current accounts and installment loans were considered.
Daily and fixed deposit accounts
The ECB decisions of July and September had already caused interest rates to rise on overnight money accounts, and a significant increase in interest rates was also noticeable for newly concluded fixed-term deposits. According to the financial comparison portal Biallo, interest rates are higher than they have been since early 2013. All comparison portals are currently assuming that the trend towards higher interest rates will continue and possibly accelerate over the course of the year. For a one-year fixed-term deposit with German deposit insurance, 1.75 percent interest can currently be obtained. In financial institutions in the EU it is up to 2.2 percent (Crédit Agricole). According to Biallo, there are up to 2.35 percent or 2.55 percent for terms of two to three years. And if you can currently spare your money for 10 years, you even get up to 3.50 percent interest in Germany (Bausparkasse Mainz).
New customer offers for over 1.1 percent are already available for overnight money from a German deposit insurance (Bank11).
Daily money accounts in comparison
In the current environment, savers can use the staircase strategy. In this case, the entire savings are not in a single fixed-term deposit account, but are divided into different accounts with different maturities. Flexibility is therefore important in the current environment, so savers should not put all their wealth in long-term investments.
Fixed deposit accounts in comparison
installment loans
At the same time, as mentioned, interest rates on consumer loans are also rising. In the last few months, interest rates on consumer loans have risen by an average of around 3 percent month-on-month to 6.33 percent in August, on a national average, reports the credit comparison portal Smava and forecasts that the national average will probably be around 7 percent in the next few months. The refinancing of installment loans is becoming more expensive for banks and thus also for consumers. Only the respective bank will know whether and how the next adjustments have already been priced in.
Even before the interest rate hike in September, Check24 observed a significantly larger range of interest rates. This means that banks are more selective about borrowing customers, especially when budgets are tight. Which makes a loan comparison even more important. For example here:
Installment loans in comparison
building interest
Interest rates have more than quadrupled since the beginning of the year. According to loan broker Dr. Klein, the effective annual interest rate for a five-year loan is currently 3.78 percent on average from around 700 banks, and 3.95 percent for a ten-year loan. The ECB decision only indirectly affects building interest rates. The most important indicator are the interest rates for ten-year Bunds. Because they largely determine the yields for Pfandbriefe, which in turn are used by banks to refinance real estate loans. But Check24 had already made a commitment in September and predicted that the average home loan would definitely increase by a few thousand euros within the term by the end of this year. In addition, banks are acting more restrictively when it comes to lending. In the case of current mortgage loans, on the other hand, nothing changes.
Building loan interest comparison
Interest on the checking account
If you’re feeling a little tight, you often overdraw your account and use the overdraft facility to overcome the bottleneck. Which is usually not a good idea. Especially in times of rising interest rates. Apart from that, the overdraft interest will also rise due to the turnaround in interest rates, since the financial institutions are based on the ECB key interest rate. According to Biallo, the current average interest rate for an overdraft facility is 10.07 percent. The interest for the overdraft of the overdraft facility is already 12.39 percent. Apart from that, debtors should be aware that the overdraft facility for the checking account is usually the most expensive loan from the bank. You should only use it exceptionally and for a short time.
Checking Account Comparison