The price of money in Europe is getting more expensive. This means that as the pressure on banks to repay customer deposits increases, the costs of taking out loans or variable rate mortgages will continue to rise. Board of Directors European Central Bank (ECB) decided this thursday raise rates concern for others 0.5 points percentages with the main rate 3.5%(Maximum since November 2008, dawn of previous crisis). Thus, the monetary authority continued the increase announced 6 weeks ago. investors fear banks In the stock market after the crisis Silicon Valley Bank and Credit Suisse. The recovery in prices after the central bank’s support for the Swiss bank eased the pressure on the ECB.
The main consequence of the central bank’s action is that requesting loans has higher costs for users, and those referring to variable rates become more expensive. “There were rumors this week that the ECB would raise rates less than expected, and This directly affected the Euribor price.“, points out Miquel Riera. Euribor is the main index by which mortgages are referenced and represents the average rate at which banks lend to each other. Interest rates on interbank loans are as of last Friday. This is why the daily value of Euribor is on Friday, Monday, Tuesday and this Thursday. days are down. From 3.978 percent on Thursday to 3.359 percent on Thursday,” Riera explains.
ECB stays on course and the increase in rates triggers Euribor again. “Currently about 3.8%, which means an increase of about 300 euros per month for an average 25-year mortgage, but we’re likely to hit 4% soon,” says XTB analyst Joaquín Robles. Riera said, “It is likely to rise again,” and underlines that it is necessary to look at the forecasts of institutions for the next monetary policy meetings to be held in May and June.
On the other hand, the pressure on banks is also increasing.. Organizations in Spain did not accept the six rate hikes by the European Central Bank. This new rise in the price of money represents once again a turn for organizations to start the battle for customer savings. “Right now they have liquidity and they don’t see the need to repay deposits. And customers don’t demand it either. As long as they don’t feel pressure, institutions will hold out as long as they can without paying savings.” ,” says the analyst at XTB.
Prominence of fixed income
Related news
Other financial products that benefit from interest rate hikes are fixed income products. “Despite the recession risks in the euro area, the pressure on the European Central Bank to increase interest rates will continue in the coming months. However, we can also expect interest rates to peak in the first half.‘, says the report. Fixed income renaissance From Credit Suisse. “In 2024, interest rates will continue to be above 4% in the United States. This is a good time to bet on fixed income and build a portfolio. We haven’t seen an opportunity like this in ten years.. “The start of the year has been particularly good for the debt market,” says Joanna Galindo, Fixed Income and Structured Analyst at Tressis.
This treasure letters Government-issued bonds, on the other hand, have come to the fore in recent months, thanks to the rise in the price of money. These products now offer returns of up to 3% in 12 months. “A clear competitor for bank deposits”says Joaquin Robles. “We bet on corporate loans, three to five year bonds are a good option. We like it about the Treasury as well, but we would limit it to two-year maturity securities,” explains Óscar Martínez. , Norbolsa assistant manager of portfolio management.