When will saving rates increase?

Pixel Eater · 12-09-2022 2:46pm #1

So the ECB has recently, and quite steeply, risen its interest rates. Obviously the banks were quick enough to pass that on to their mortgages but not so fast with their saving accounts. When are they likely to raise those?

The J Stands for Jay · 13-09-2022 7:44am

They'll increase the rates whenever they want deposits coming in. Which they don't right now.

Geuze · 14-09-2022 11:49am

https://www.boards.ie/discussion/2058263051/when-will-saving-rates-increase

There were no increases to SVR mortgage rates, yet.

Banks are awash with deposits, no pressure to raise rates.

dotsman · 14-09-2022 5:59pm

Obviously the banks were quick enough to pass that on to their mortgages

What are you talking about?

L1011 · 14-09-2022 6:02pm

https://www.boards.ie/discussion/comment/119618761#Comment_119618761

Someone doesn't know / remember what a tracker mortgage is; I'm guessing. Just without requiring the top deck of a bus.

Jim_Hodge · 14-09-2022 6:02pm

Banks maintain they didn't pass on all negative interest rates in past, so they won't be paying the increased rates in a hurry.

dotsman · 14-09-2022 6:25pm

True. But that is automatic, without the banks making a decision on the matter.

For all the mortgage rates that the banks do control, they have chosen not to pass on the rate hikes so far.

And has been stated above, they are awash with deposits, where they didn't pass on the rate cuts in the past, so there is no expectation on them increasing rates any time soon.

dennyk · 17-09-2022 9:12am

The banks will only increase deposit interest rates when they need an influx of cash and they believe they can fulfill that need at a lower cost by increasing their deposit rate than by paying the current interest rates to borrow from the Central Bank. It's not something they'll do until it becomes financially advantageous.

Also, remember that in many cases a deposit rate increase will apply to all existing deposits of the type in question, not just new ones, so that affects the calculation as well. If the bank has €X in demand deposits and needs €Y in cash, raising their demand deposit rate to a level that should encourage their customers to deposit an additional €Y in aggregate will mean the bank will be paying that rate on (€X + €Y), which might be more costly in the end than just paying to borrow €Y from the Central Bank.

Donald Trump · 17-09-2022 9:18am

When there is competition in terms of rates, and people willing to switch. The latter being more important as it also encourages the former.

Jim_Hodge · 17-09-2022 9:42am

The only thing is banks don't want people switching deposits. The last thing they need are more deposits.

Donald Trump · 17-09-2022 9:48am

https://www.boards.ie/discussion/comment/119629993#Comment_119629993

Pre July that was the case. Up to then, any excess deposits were explicitly costing them money.

ECB overnight deposit rate is 75 bps since latest rise. And it will likely go up again over the short term. Not huge enough to care about a savings account with 500 Euros, but over time they will be more interested in attracting deposits

After the last crash I recall getting 6% interest on a 1-year fixed term deposit account in Ireland! I'm not saying that that will happen tomorrow or next week, but just pointing out that such rates are not unheard of. If the markets decide to stop lending to the banks, then you won't be long in seeing an increase in rates

Jim_Hodge · 17-09-2022 1:49pm

https://www.boards.ie/discussion/comment/119630014#Comment_119630014

I'm well aware of historic rates and received 50% on 5 year deposit myself. However, we're far from that situation and your scenario involves ifs that are unlikely in the next 12 months.

coylemj · 17-09-2022 3:11pm

The first bank which raises it's savings rates above the current level (effectively zero) will be immediately swamped with billions of euros in deposits. Can't see any institution racing to that starting line.

When will saving rates increase?

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