2016 is drawing to a close and not a few people are likely to hope that 2017 will be more positive in many ways. Which is understandable, because 2016 was probably one of the most eventful years since the turn of the millennium. But when things went haywire on the global political scene, there were certainly positive developments in small everyday areas of life, which had a direct or indirect impact on the consumer. One of these developments was the European Central Bank’s policy of low interest rates, which was responsible for ensuring that lending was cheapest than ever. Those who applied for a loan from their house bank in 2016 received a federally average interest rate of around 6.15% per annum. A value that has steadily declined since 2011 and marks the previous low in lending rates.
For the first time 0 percent loans in 2016
But it was even cheaper than the aforementioned interest rate of 6.15% per annum for a loan. For the first time, loans were offered with hitherto considered impossible 0.00% interest. Although these loans were limited in time and also limited in terms of the loan amount, they nevertheless marked a kind of milestone in German credit history. Again, the reason for this 0 percent loan was with the European Central Bank. Because in March 2016, the ECB decided to reduce the so-called interest rate on loans to 0 percent. This was intended to make it easier for banks in Europe to lend and, as a result, stimulate the economy in European countries. As a result, financial institutions were able to lend money for free from this point on – at an interest rate of just 0 percent.
Consumers benefited from ECB credit decision
In order for consumers to feel the positive effect of the ECB loan decision directly, banks were instructed to pass on the low interest rates to their customers without delay. If one looks at the interest rate development on a month-by-month basis for 2016, a clear downward trend can be recognized here. Anyone who currently launches a loan request at one of the major comparison portals receives a large number of loan offers, which generally run at an interest rate between 1.95% and 4.5% interest per annum. This still gives rise to an interest charge on a loan that, according to the ECB, should not exist in this way. Nevertheless, as of 2015, interest rates have fallen significantly. As a supervisory authority, BaFin is currently examining the extent to which banks have complied with the ECB’s requirement to pass on the zero interest rate regulation to its customers. First results of that evaluation are expected in early 2017.