Erste Savings and Credit Forecast Q3: Almost every second Austrian thinks low interest rate policy is a mistake

  • Investment in real estate ever more popular
  • Average amount intended to be saved over 12 months: EUR 6,200
  • 46% oppose low interest rate policy

Where Austrians are putting their money

Austrians remain eager to save: according to a survey conducted by Integral on behalf of Erste Bank, 8 out of 10 Austrians plan to invest money in the coming 12 months. Traditional forms of saving continue to be preferred: 57% (-1) are parking their money in a savings account, 48% (±0) like building savings contracts. Every fourth respondent (25%) invests in securities. Life insurance policies and pension plans enjoy the same level of popularity as previously, with 37% and 33%. The most significant growth compared to the previous year was posted by real estate. 17% of respondents are considering investing in a house or a condominium in the coming year (+4).

Plans to both save and borrow larger amounts

How much money do Austrians intend to sock away? Despite low interest rates, Austrians plan to save EUR 6,200 on average. That is EUR 1,000 more than a year ago. “A respectable quarter of respondents is considering investing in securities as well. This is essential in order to accumulate wealth over the long term”, stresses Thomas Schaufler, chief retail officer of Erste Bank. The desire of Austrians to save is also reflected in a declining willingness to purchase big-ticket items: While 33% of Austrians were still planning to spend on a major purchase in 2015, only 29% (-4) want to do so this year. Cars and home renovations are to be primarily financed with savings (81%), while 5% want to borrow money privately. Interest in bank loans has increased noticeably. More than a fifth (21%) of Austrians wish to finance a major purchase with a bank loan (+8). The loan amount they plan to apply for has grown as well: on average, Austrians plan to borrow EUR 75,200 from their bank. This is an increase of EUR 9,500 compared to the same quarter of the previous year (+14%).

Scepticism over low interest rate policy

The ECB's low interest rate policy doesn't deter Austrians from saving, but it evidently increases their willingness to take out loans. This is particularly noticeable in residential construction financing: In conjunction with current low interest rate policies, mortgages that were already offered at favorable rates represent a strong incentive for the purchase of real estate. Almost half of Austrians nevertheless believe that the ECB's low interest rate policy is a mistake. 34% consider it a good thing and 20% don't have an opinion on the issue yet. “We don't expect any big jumps in interest rates on the short end over the coming three to five years. Currently we would definitely recommend taking out fixed rate loans though. 8 out of 10 customers are already choosing this option at present”, Schaufler urges. It is possible that long term interest rates will already increase slightly next year. In that case fixed interest rates would rise as well.

About the study: Integral has interviewed 1,000 Austrians (representative for Austria's population from the age of 14) via telephone about their plans regarding forms of saving and investment, as well as about their financing needs. The survey was conducted in the 3rd quarter in the time period 09. September to 04. October 2016. Unless indicated otherwise, comparative figures refer to the same quarter of the previous year.