Erste Bank Savings and Credit Forecast Q1 2015: Mortgage loans with fixed interest rates increasing

Savings amount declines by one quarter

Austrians are still saving, even though a lot less than a year ago. 4,500 euro are to be set aside over the coming 12 months, while in the first quarter of the previous year, Austrians still stated that they wanted to invest or reinvest approx. 6,200 euro (-27%). While the savings book remains the main vehicle for saving, its popularity has reached an all time low of only 61% (-1). Building savings accounts are increasingly favored again, reaching 57% (+2). Life insurance policies (44%), similar to pension plans, see the biggest gain (+6). Due to low interest rates, investment in securities is once again increasing markedly as well, from 22% to 25%. Those who don't want to invest at all over the coming 12 months decline to 14% (-6). According to Statistics Austria, the savings rate has stabilized at 7.5% in 2014, in 2013 it stood at a mere 7.3%.

Major purchases planned

More and more Austrians are thinking about purchasing a big ticket item. A year ago 33% did so, currently 37% are considering such an investment. The number of those who want to pay for this out of their own savings remains unchanged (83%). The group that wants to take out a mortgage loan or a bank loan for this purpose remains at the same level as well (16%). The intended amount to be borrowed has however declined: while in early 2014 intentions were still for borrowing 77,200 euro on average, this has declined to only 58,700 euro this year. This is a development that isn't reflected yet in the financing volumes of Erste Bank und Sparkassen. Thus loans to private households stood at 27.7 bn. euro at the end of February, exactly one year ago they still stood at 26.5 bn. euro. At present more and more people are making sure that current low interest rates will remain fixed for between 10 to 15 years. “Around 40% of all new mortgage loans are now entered into at fixed rates”, explains Peter Bosek, member of the management board at Erste Bank. “Due to the long term horizon of such borrowings, this is a welcome development that will let home builders and buyers of apartments sleep more soundly.”  Fixed interest rates for 10 – 15 years are only about 0.5% higher than variable rates.

Austrians not optimistic on economy

When asked about the trend of the economy in 2015, around one third of Austrians fears that economic growth will be weaker this year than last year. Approximately half expect that it will remain at a similar level as last year, and only 17% are optimistic and expect an improvement in economic data. The experts of Erste Bank expect slightly stronger economic growth this year. According to their estimate, GDP should grow by 0.8% in 2015, after only 0.3% in 2014. The main drivers of the slightly better trend are a revival of exports as well as stronger private consumption, which should remain supported by low inflation rates.About the study: Integral has interviewed 1,000 Austrians (representative of the Austrian population from the age of 14) via telephone and asked them about their savings and investment intentions, as well as their financing needs. The survey was conducted in the 1st quarter in the time period from 6.3.-31.3. 2015. Unless stated otherwise, comparative figures refer to the same quarter of the previous year.