For the first time in around a year and a half, the interest on savings on fixed-term deposit accounts has fallen again. However, the level is still comparatively high, as shown by data from the comparison portal Verivox. At the same time, property buyers and house builders can breathe a sigh of relief: according to the Check24 portal, building loans have become cheaper.
Since July 2022, the European Central Bank (ECB) has combated high inflation in the common currency area with ten interest rate increases in a row. Savers benefited from this, but it became more expensive for builders. Most recently, the euro currency watchdogs took a break from interest rates. The central bank’s next monetary policy decision is due today.
Inflation has now fallen more significantly than many experts expected. “Low inflation could cause the central bank to lower its key interest rates earlier than previously planned. The banks take this into account when designing their fixed-term deposit conditions,” explained Oliver Maier, Managing Director of Verivox Finanzvergleich GmbH.
Tough competition
According to Verivox data, as of December 11th, savers received an average of 3.35 percent interest for 10,000 euros in fixed-term deposits with a term of two years at banks active nationwide. At the beginning of November it was still 3.39 percent. Fixed-term deposits that were invested for five years still had an average interest rate of 3.15 percent, compared to the previous 3.21 percent.
According to Verivox, the offers from regionally active savings banks and cooperative banks are on average lower than those from nationally active banks. “At local savings banks and cooperative banks, interest rates are falling much faster and more sharply than at banks that offer their savings products nationwide and are therefore exposed to much tougher competition,” explained Maier.
Verivox has not yet observed a decline in average interest rates for overnight money, although the increase has almost come to a standstill recently. At banks with a nationwide offering, interest rates in this area have increased by a minimal 0.06 percentage points to an average of 1.71 percent since the beginning of November. At savings banks (0.59 percent) and regional cooperative banks (0.58 percent), savers receive significantly less on average.
Interest rates on real estate loans have fallen
Real estate buyers, on the other hand, benefit from a fall in interest rates. “Banks are already pricing in possible interest rate cuts by central banks in the coming year,” said Ingo Foitzik, Managing Director of Construction Financing at Check24. The interest rates on the ten-year federal bond, on which interest rates for real estate loans are based, have fallen accordingly.
According to data from the comparison portal Check24, the average interest rate for a construction loan of 400,000 euros is currently 3.34 percent annually (reference date: December 13th). The interest costs therefore amount to 114,085 euros until the end of the ten-year fixed interest rate with the same monthly rate. Compared to an average interest rate of 4.02 percent in October, this means savings of 28,771 euros in interest costs.
Changes in interest rates affect builders who need a new loan or follow-up financing for a real estate loan. As a rule, nothing changes with current mortgage loans. The consumer portal Biallo.de also provides information about interest rates.
