The European Central Bank (ECB) decided to keep interest rates at 4.5% this Thursday. For the first time since July 2022. The monetary establishment has paused monetary normalization while it waits to learn how inflation, growth and employment are developing in euro countries. The ECB increased the cost of money by up to five times in 2023 in order to control the price increase in the economies of the Old Continent.
The monetary establishment has paused monetary normalization while it waits to learn how inflation, growth and employment are developing in euro countries. ECB increases the cost of money by up to five times in 2023 In order to control the price increase experienced by the economies of the Old Continent.
Since she started raising interest rates on July 21, 2022, European Central Bank President Christine Lagarde has repeatedly repeated that monetary policy is linked to the “data” shown by the eurozone economy. Data will again determine how high interest rates will remain and how long the pause in interest increases will last.
“Still Inflation is expected to remain very high for a very long time and domestic inflationary pressures appear to remain intense. “At the same time, inflation fell sharply in September due to strong base effects, and most key indicators of inflation continued to decline.”
While ECB to control and reduce coil lace Inflation in the Eurozone – We closed September with CPI at 4.3%– and carefully analyzing the serious signs of a slowdown in the economy (especially the German economy, which needs more time to recover from the effects of rising energy prices), citizens are wondering whether this pause in monetary policy will represent an improvement for your financial situation.
“Lagarde and her team do not want to stifle Europe under any circumstances, even less so now with another war going on. Moreover, The cost of member countries’ debt is becoming increasingly expensiveOlivia Feldman, co-founder of financial comparator HelpMyCash.com, explains: “The ECB can therefore be expected to pause increases at this meeting to give the European economy a break.”
“Actually, Rates holding steady at 4.5 percent do not represent an improvement for now Spain’s financial situation. The cost of the basic basket will continue to find its way into consumers’ pockets, and variable-rate mortgage holders will once again find their payments becoming more expensive if they review in the coming months,” Feldman explains.
Does it benefit variable-rate mortgage holders?
Unless Euribor falls sharply, holders of variable rate mortgages will continue to suffer every time they come under scrutiny. And if the current trend of 4.1% continues, wages will be more expensive than they were six months or a year ago, depending on when they were reviewed. In this environment a Euribor makes the average mortgage around 250 Euros more expensive per month, which means: Increase in loans for Spanish families by 3,000 euros per year.
“For this reason, those who have variable interest mortgages should not wait any longer and renegotiate your mortgageespecially for those with a good profile, They can improve their conditions and protect themselves from the uncertainty of Euribor’s future.. Also, since it is the end of the year, organizations need to hit their sales targets so they have more room to offer good deals,” advises Feldman.
What will happen to deposit payments?
Interest rates have increased by up to 10 times since July 2022. While this caused mortgage holders to pay much more on their loans, as profitability increased, investors regained their confidence in government bonds and are now in the business. First owner with 20 billion 348 million treasury bills. In August, families held 28.6 percent of the 70 billion 913 million euros of these securities in circulation; a year ago families owned only 0.04 percent.
However, savers do not receive fees on their deposits in line with what other European citizens receive. Actually, European banks already pay 3 percent on deposits Spanish continues to remain at 2.31%. While the ECB has been withdrawing liquidity from the market in recent months to reduce inflation, Spanish banks have started paying more for deposits, especially small and digital institutions, while large banks have been slower to act.
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HelpMyCash.com underlines this It’s time to benefit from the interest offered by fixed maturities Through such banks. “It has been years since deposits offered returns similar to those seen now, and it is a shame that Spaniards are not taking advantage of their savings,” Feldman says. According to the expert, there are now online banks offering annual loans in neighboring countries such as Italy. 4.40% APR. There is also a Guarantee Fund of up to 100,000 Euros per customer and organization and contracts can be made in Spain.
“It’s time to put the money to work. Take advantage of these with such attractive fees and minimal risk “This is an opportunity in a situation similar to the current one, where the variable and fixed income market is experiencing turbulence and negative returns,” he notes.