Several months later, a flat EEG-like pattern emerges as fees are paid despite higher official rates. Banks begin to show signs of activity due to new time deposits. The average share of these savings products among households in March rises to 1.31 percent, up from 0.89 percent in February. This marks a level double the 0.59 percent recorded in January and stands as the highest in nine years since February 2014. For banks, this is less burdensome because the majority of families keep their money in checking accounts with a modest average return of 0.08 percent, according to data from the Bank of Spain.
The ECB softened the rate hike by 0.25 points but signals more increases may follow
In March, households held 985.492 billion in bank assets, and 93 percent of that amount, about 915.606 billion, was in checking accounts at the 0.08 percent rate. Only 7 percent, or 69.886 billion, resided in time deposits with an average rate of 0.52 percent. The lower return on balances reflects that most products were contracted when borrowing costs were minimal. Around 755.461 billion in 2014 were spread across almost equal portions of 0.17 percent in checking accounts and 1.39 percent in time deposits used to reduce customer debt.
Another notable fact is that households placed 11.480 million euro in deposit contracts in March, a 70 percent rise from February and the highest monthly total since May 2019. This boosted the overall balance by 6.1 percent to 69.886 billion, as new deposits exceeded 4.026 billion. In March, two institutions faced market turbulence caused by the collapse of Silicon Valley Bank in the United States and the difficulties of Credit Suisse in Switzerland, which drove large deposit withdrawals.
to other products
As a result, Spanish businesses shifted deposits toward other products during the financial turmoil. Banks increased the cost of money after the European Central Bank began tightening policy in July of the previous year. Some Spaniards deny that the crisis caused a rush of departures, arguing that customers are simply moving savings into other instruments such as treasury bills and mutual funds. By December, current accounts and deposits totaled 21,474 million and 2.1 percent, while households directed more savings into alternative products.
Average new deposits by households in Spain stood at 1.31 percent, still below the euro area average of 2.11 percent. The ECB data show the gap narrowing from 1.03 percentage points in February to 0.8 points. The differential between bank balance yields and the European average hovered at 0.99 points. Across Europe, the average on new deposits is 1.51 percent, while Spaniards receive about 0.52 percent. In contrast, the interest on new loans or deposits for companies remains higher: banks are paying about 2.28 percent on new deposits, approaching the European average of 2.57 percent.
credit increase
On the lending side, the average new mortgage rate paid by families rose from 3.43 percent to 3.54 percent, while the effective balance grew from 2.52 percent to 2.7 percent as Euribor rose. The result is a measure of the cost efficiency banks enjoy with lending margins. The disparity between the mortgage portfolio rate and the time deposit rate remains high, although it eased slightly from a record 2.2 percentage points in February to 2.18 points in March.
Lower deposit payments than in the euro area do not imply cheaper loans in Spain. The average new mortgage rate in the country remains above the European average for the third consecutive month, at 3.54 percent versus 3.37 percent. The average interest on the loan balance for home purchases in Europe rose only from 2.04 percent to 2.09 percent, widening the gap to Spain to 0.61 points.