Belgian long-term interest at an all-time low

The Belgian long-term interest has dropped to an all-time low of 1.5%. At the beginning of 2014, it was still more than 2 percent. It’s a trend noticeable in whole Europe. Everyone’s applauding, except for the savers and rentiers.

Ghost of deflation

In times of crisis and geopolitical conflicts, investors prefer safe investments. Moreover, the ghost of deflation is still hanging over Europe like a shadow. A lot of experts, for example, are not convinced that the European Union will succeed in suppressing this dire economic threat. As such, investors playing it safe are still turning toward secure government bonds.

The government? They’re celebrating, because they’re up to their ears in debt and are seeing their interest expense drop. The lowered interest rates are also good news for people who want to enter into a loan. Companies can also reap the benefits as they can more easily invest or repackage their old loans.

Bad news for savers

Savers and rentiers? They are suffering of course. People who live on interest income aren’t in the best of moods now. Not infrequently are they putting more money on their savings accounts in order to maintain the same amount of interest income. In the context of the inverted population pyramid, some economists think that the lowered interest rate will only encourage saving rather than consuming.

Savings interest reduced

An effect of the low long-term interest rate and the low short-term interest rate on the financial markets is that five banks have in the meantime lowered their savings interest. A savings account with Belfius only gets you 0.25 percent, their loyalty bonus is stuck on 0.15 percent. As such the bank comes on par with KBC. A savings account with Crelan and Beobank gives you the same amount of interest as with KBC and Belfius, only with DHB will you receive a slight advantage.

After many EU-interventions meant to influence the market interest, experts expect that the ECB will be injecting even more cheap money into the economy. The predicted growth hasn’t happened yet after all. Wanting to remove your savings from the bank and invest? Then the growing diamond market is a more than just interesting option for you. The experts at BAUNAT would love to guide you along.

Author: Katrien Maes

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