Nearly a billion euros have already moved into Spanish households through banks. Specifically, by the end of July, deposits stood at 997,446 million euros, up 0.24% (2,464 million) from June. This marks a 5.7% year‑over‑year rise (54,500 million) and a 17% increase compared with the pre‑pandemic level (144,200 million), according to data released this Friday by the Bank of Spain. The growth isn’t limited to households; business deposits have also risen, climbing 6% on the year to a total of 312 billion. All of this unfolds while savers await the moment when financial assets start paying meaningful interest again, in the heat of ongoing rate hikes as the European Central Bank grapples with inflationary pressures and the debt outlook in the coming months.
Spaniards generally maintain a conservative savings profile. The evidence is plain: they have kept increasing the money parked in banks in recent years, even though returns have been slim. Inflation has eroded purchasing power, yet deposits have continued to grow. Between 2009 and 2019, the consumer price index averaged 1.3% in the euro area. In Spain, the average deposit rate has remained below that level since February 2015, and it has persistently stayed under 1% since August of that year, dipping below 0.1% by February 2020. The latest available data, as of June, shows a deposit rate around 0.04%.
With the grace period ending for many deposit products, major Spanish financial institutions have signaled a gradual repayment of debts, though at modest interest rates and with limited access for customers, particularly after the summer season. A recent Bank of Spain report underscored this trend: there is a clear expectation that financial institutions competing for funds will begin to offer higher salary deposits in the coming months, as banks seek to attract new funds in a tighter liquidity environment.
affiliated with the ECB
The cost of money, and the responsibility tied to it, is shaped by the ECB. In July 2008, at the onset of the previous crisis, the policy rate stood at 4.25%, and Spanish banks charged households about 4.2% on deposits, in a period of tight liquidity after the U.S. subprime mortgage boom. Since then, the monetary authority began cutting rates to preserve the euro area, which caused the savings rate to collapse. This dynamic is central to the current debate about how monetary policy affects household deposits and bank funding costs.
In March 2016, the official rate was brought down to 0%. Earlier, in June 2014, the ECB began charging banks for holding their money through the deposit facility, which reached as low as −0.5%. For more than five years, the prospect of earning a return on savings through deposit interest effectively disappeared. This monetary policy stance is now being reassessed as inflationary pressures reappear and policymakers consider how to restore a balance between incentivizing saving and supporting economic activity.
rising rates
The ECB has raised rates by 0.5 percentage points, marking the first move in the money market in 11 years and the largest hike in more than two decades, signaling a shift back toward normalizing monetary policy. Some leading voices, including influential ECB officials, have suggested that further increases could follow in September and at subsequent meetings, depending on how inflation, growth, and currency conditions evolve. This shift has immediate consequences: banks, which previously paid little to no interest on new deposits, began adjusting their terms. In June, banks offered an average of 0.33% on new corporate deposits, compared with 0.09% in May and 0.24% at the start of the year. Projections suggest that, as the central bank continues to tighten, institutions may start paying to hold funds in the ECB once again and pass some benefits of these operations to depositors. The overall expectation is that higher rates could eventually translate into higher returns for savers, albeit with caution as lending conditions also tighten.
The broader market outlook remains contingent on inflation trends, economic growth, and the transmission mechanism through which central bank actions influence bank margins and the rate offered to households. As banks recalibrate their pricing and funding strategies, savers may see a gradual reacceleration in deposit yields, provided economic conditions remain favorable and credit demand holds steady.