One interest rate hike follows the next, and loans have become more expensive. Nevertheless, some banks still pay mini interest rates. Why? You’re sitting on too much money.
Austria’s National Bank (OeNB) made it official on Monday: interest rates on loans and restricted savings deposits have meanwhile risen to their highest level in over ten years. The reason for this is the sharp increase in the key ECB interest rate to 3.5 percent. That should slow the escalating inflation (in February it was 10.9 percent!). The OeNB analysis in detail – and why savers must remain brave:
You pay an average of four percent for loans
Credits: The interest rates for borrowing have risen on average year-on-year (the OeNB compares January 2022 with January 2023 in its analysis) from 1.6 percent to 3.95 percent most recently. Specifically, new housing loans have increased in price from 1.18 percent to 3.33 percent. For consumer loans (which are usually unsecured), the banks’ “risk premium” is already 8.02 percent – after 5.83 percent a year ago. What is also becoming apparent as a result of the sharp rise in interest rates: Austrians are less and less daring. In the second half of the year alone, only new loans with a volume of 9.2 billion euros were granted, a drop of 41 percent in the half-year comparison.
Only mini-interest plus for overnight deposits
savings interest: According to the OeNB, this amounted to an average of 2.03 percent in January this year (2022: 0.2 percent) – but only for deposits tied to one year. In the case of overnight savings, on the other hand, interest rates have risen from nothing at all to an almost equally meager 0.29 percent. The so-called daily allowance is by far the most popular form of savings in Austria. According to the OeNB, around 213 of the 799 billion euros in financial assets were invested in this way in the first half of 2022. Tied deposits came to just 91 billion.
Banks don’t get rid of money
Why is there so little for savings? Very simple – loans have become more expensive, fewer and fewer Austrians want one. According to Martin Spona, financial professional of the comparison portal durchblicken.at, banks are therefore sitting on too much money that nobody needs (anymore) at the moment. Savers, i.e. people who bring fresh money, are therefore not very welcome. For this reason, savings books and savings accounts are only available for existing customers.