Thursday, 01.11.12 , written by Henriette Neubert New Smartphone, Bigger TV or a Faster Car – Anyone who wants to make major purchases and plans to take out a loan should act soon. Currently, lending rates are lower than they have been in a long time. This could change in 2013. >
In 2012, lending rates in Germany were historically low. This is mainly due to the current interest rate policy of the European Central Bank (ECB). To lower the interest burden on the crisis countries, the ECB has lowered its key interest rate to a record low. Currently, it is less than one percent at 0.75 percent – For comparison, in 2008, he was over five percent. This makes lending cheaper for commercial banks and thus for the consumer. Installment loans are currently available, for example, for a borrowing rate of 5.84% pa, including easycredit.
Because of low interest rates, the savings rate is falling
Not only the interest on loans is low. Also, the interest for savers is currently so low that it hardly compensates for the inflation rate and thus makes savings a loss. Therefore, the savings rate in Germany has fallen since 2008 from almost 12 percent to 10.5 percent. That is, the Germans are currently spending their money rather than saving. In addition, more and more people are investing in real estate – largely credit-financed. This seems to be the best way to protect yourself from impending inflation.
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Threatens a real estate bubble in Germany?
The flight into the real estate market shows parallels to the development in the US until the beginning of the real estate crisis: Extremely low lending rates for real estate and a low savings rate. The first experts, including the chief economist of Helaba, Gertrud R. Traud, in the world warn against a real estate bubble in Germany: “Should the price increase in real estate continue, overheating in submarkets can not be ruled out. Then the flight to the supposedly secure investment property would become a trap. “
However, the German savings rate is still far from the American. At the height of the real estate boom in 2005, this amounted to only 1.3 percent.
The key interest rate will rise again
If the low base rate and high demand for credit remain, money will continue to be pumped into the economic cycle in the near future. This increases the actual risk of inflation. In order to prevent this, the ECB will have to raise its key interest rate. So it may well be that after 2012 with the low interest rates is over. However, the rate hike is expected to remain contained in the coming year. As long as Spain, Italy and other crisis-hit countries continue to struggle with the financial crisis, the ECB will not significantly raise key interest rates. Experts believe that a rise of 25 basis points in the coming year is realistic. That should remain manageable for most borrowers. The Federal Association of German Banks (BdB) even anticipates no change (finanzen.net)
But regardless of whether you want to raise a loan in this year or next year, a detailed comparison of the offers always makes sense. Not only is the borrowing rate important, but above all the annual percentage rate of interest, as it also includes fees, commissions, etc., which can vary greatly from one bank to another.
Basically, a (credit) interest is the charge at which a creditor lends money to a debtor. The interest should fulfill different functions. In addition to the “price” for the money borrowed, there is a risk premium for the possibility that the money can not be repaid. It also includes inflation compensation and the opportunity cost of money. The former is to compensate for the loss of purchasing power through inflation, the second is a compensation payment against a lost profit, if the creditor had invested his money elsewhere.
Thus, the creditworthiness and the term of a loan for the interest calculation play a crucial role. The interest calculation is based on a risk-free interest rate (ie the interest rate for a debtor with the highest credit rating, for example government bonds) over the same term. This is based on the key interest rate of the ECB. For this purpose, the surcharges will be added. The lending rates differ between the individual banks as they weight the criteria differently and assess risks differently.
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- Henriette Neubert
- editorial staff
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