December 9, 2022

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Mortgage rates have risen sharply: why not track savings interest?  † MyGuide . Guide

Mortgage rates have risen sharply: why not track savings interest? † MyGuide . Guide

Spaargids.beOne interest is not the other. You don’t have to look far to prove it. A look at the evolution of interest rates on savings accounts and those of mortgage interest rates says a lot. The first has been very low for a long time, and the second is starting to climb this year. But why not increase the interest on the savings account with it? Spaargids.be explains.

To answer this question, a distinction must first be made between long-term and short-term interest rates. Mortgages follow waves of long-term interest rates. This is the interest on government bonds that have at least ten more years to run. Long-term interest rates are currently on an upward trajectory. Since the Corona crisis, the European Central Bank (ECB) has been buying government debt collectively. I did it as a support measure. But now this purchase has been curtailed. So governments are looking at the financial markets again, and they want investors to invest in government bonds. But those same investors are not satisfied with the ECB’s current low interest rate. They demand a higher interest rate, which leads to higher interest rates on mortgage loans.

What is the interest rate on home loans today? View here the mortgage interest rate buyers who have recently negotiated

short term benefit

The fact that interest rates on savings accounts do not increase, because they were part of the short-term interest rate. This is completely separate from the long-term interest rate. Whether or not short-term interest rates will rise is a matter largely left to the European Central Bank. Since the 2008 financial crisis, the European Central Bank has allowed short-term interest rates to drop sharply to 0%. The issue of discouraging saving and encouraging you to spend and invest money. Only then will the economy recover. The low interest policy still applies. Currently, prime interest rates on Belgium savings accounts fluctuate between 0.00% and 0.25%. Total interest (prime interest + fidelity interest) is between 0.00% and 0.65%. See here the savings accounts that currently offer the highest interest.

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Not related

Troubled interest rates on mortgage loans and “idle” interest rates on savings accounts have led to an interest imbalance that many people don’t understand. “The interest rates on savings accounts and those on mortgage loans are not directly related,” explains Inge Everaert, a Beobank spokesperson. Thus, the increase in interest rates on mortgage loans does not have a direct impact on the interest rates on savings accounts. Short-term market interest rates have been negative for several years. Although there is currently a gradual recovery in the benchmark short-term interest rates, they remain negative to this day. Standard long-term interest rates are often higher than short-term interest rates. But on the long-term accounts, the interest rate is already going up.”

gradual recovery

Whether interest rates on savings accounts will rise this year remains a question mark. “We are currently seeing a gradual recovery in short-term interest rates and are following the trend closely. It is still early today today to get ahead of things,” Inge Everert said. The latter is also the opinion of other banks we have contacted.

With less purchasing power, higher interest rates on savings accounts will be a welcome boost for consumers. “At higher interest rates, the customer enjoys a higher return on his savings. This will likely also be the case in the long run, but when it is difficult to predict exactly based on the current recovery, which happens very gradually.”


Read also on Spaargids.be:

Why you should not leave 100,000 euros in your savings account

Mortgage rates are rising sharply: for an average loan of more than 20 years, you are now paying the price of an additional new car

An additional pension of 1,200 euros per month: how do you get that together?

This article was brought to you by our partner Spaargids.be.
Spaargids.be is an independent comparison of banking products looking for competitive rates and better interest rates.