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ECB interest rate spiral hits privileged private sector clients » Leadersnet

ECB interest rate spiral hits privileged private sector clients » Leadersnet

| Editorial Board

| October 15, 2023

The interest rate policy of the European Central Bank (ECB) has become increasingly widespread. Despite a surplus of assets, even high-end private clients are no longer immune from increased credit burdens, warns Infina.

Even wealthy private clients in Austria with a strong financial cushion face a decline in their liquidity, especially with variable-rate loans, according to a press release from a housing finance expert. For many, this results in an unexpected adjustment to their usual standard of living. “The need for advice has increased significantly in the past few weeks – among all target groups,” Enfina confirms.

Therefore, an increasing number of clients are actively looking for robust solutions to counter the financial pressures of the European Central Bank’s interest rate policy and improve monthly liquidity. The right financial strategy has become the key to financial prosperity in these times.

Interest on deposits is 2.03 percent

In January 2023, average interest rates on deposits had already reached 2.03% and on new loans to private households 3.95%. According to the National Bank of Austria, this was the highest level in a decade, even though the key interest rate was only 2.5% at the time. It has since risen to 4.50 per cent by September, particularly affecting variable rate loans. Given the current signals from central banks and revised economic forecasts, borrowers should consider how to mitigate risks in their financing structure and reduce the financial burden, says Infina.

The risk of higher interest rates on loans still exists, as current statements by those responsible for Western key interest rate policy show. European Central Bank President Christine Lagarde has suggested that interest rates could be higher in the long term.

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Many people were affected

“Every day, our housing finance experts report on clients from all over Austria who have been affected by interest rate increases. Despite long-term increases in property prices, which serve as a safety net for many, wealthy clients are also feeling the challenges of rising interest rates. “Higher earners in particular see the need to benefit from our expertise in order to improve their financial situation in the current environment,” explains Christoph Kirchmeier, CEO and Founder of Infina.