Against the background of a persistently very high inflation rate of 6.2% (July 2023) and the resulting negative real interest rate, many savings bank private customers are investing their money in safe, fixed-income securities. They prefer fixed-income securities, which promise a higher return, to sight and savings deposits. Overall, they doubled their savings in securities in the first six months of this year to just under €2.6 billion (€1.3 billion in the same period of the previous year). This is the result of the half-year figures from the Savings Banks Association of Westphalia-Lippe.
Overall, however, people save less overall. The high rate of inflation is causing disposable real income to dwindle, leading to a drop in the savings rate. The accumulation of financial assets by the Westphalian-Lippe savings bank customers – i.e. the annual savings – fell from €1.66 billion to €281 million in a half-year comparison. Households with low and middle incomes in particular are increasingly dependent on financing their consumption to a certain extent with savings due to the fall in real income.
Demand for residential real estate loans continues to level off
In the first half of this year, the 48 savings banks in Westphalia-Lippe committed €2.2 billion in new loans for residential real estate financing – around half less than in the same period of the previous year.
The decline in demand for housing construction loans that began in mid-2022 is thus continuing. Inflation has a negative effect on construction activity: construction prices have risen and at the same time real wages have fallen due to inflation – people therefore have less of the money they have earned at their disposal.
Corporate lending back to pre-pandemic levels
The loan portfolio of companies and the self-employed increased by 3.1% to €63.1 billion in the first half of 2023. However, new business was much more subdued compared to the same period of the previous year: Loan commitments to companies amounted to €5 billion after €8 billion in the first half of 2022.
The explanation for this development lies in a special effect from the past year: Especially at the beginning of 2022, pandemic-related liquidity bottlenecks arose in numerous sectors, which led to an exceptionally high demand for credit – now that this special effect has disappeared, loan commitments are now approaching the level before the time of the pandemic. The weak economy and uncertain general economic conditions are also reasons for the restrained demand for credit from companies.
Strong growth in securities business
Looking for safe investment opportunities that offer a higher return than short-term deposits, investors have found what they are looking for in fixed-income securities and have switched deposits to this form of investment. The securities business with the Westphalian-Lippe private customers developed positively in the first six months of the year.
Total securities turnover rose from €6 billion in the same period of the previous year to €6.8 billion. Net sales of securities – i.e. purchases and sales netted – rose from €1.3 billion to €2.6 billion. Safe, fixed-income securities accounted for the largest share: net sales in this form of investment increased eightfold compared to the first half of 2022.
Renaissance in home savings
The building society business has been experiencing a renaissance since the middle of last year. The desire to own your own property is still there. In addition, there is a need for energy-efficient, sustainable renovation of many existing properties. The rise in interest rates makes the necessary financing projects more expensive, which is why customers are looking for the long-term interest rate security of home savings contracts. New home savings business amounted to €1.63 billion in the first half of 2023, 3.5% more than in the same period of the previous year.
Text source: Savings Banks Association of Westphalia-Lippe
2023-08-26 01:24:10
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