The savings banks are warning of the consequences of high inflation. “Even now, 42 percent of German households no longer have the ability to save,” said Liane Buchholz, President of the Savings Banks Association of Westphalia-Lippe (SVWL), before the Business Journalists’ Association in Düsseldorf (WPV). And this value will increase to 60 percent by autumn, in view of the further increase in inflation. “We expect an inflation rate of nine percent and more in September and October.”
The SVWL currently sees the loss of the ability to save when households have an after-tax income of less than 2,600 euros per month. In the coming months, this limit will then increase to 3000 euros. What happens next depends on the monetary policy measures of the European Central Bank (ECB). The consequences of this will only arrive with a delay, as Buchholz predicts: “It will take at least three to six months for this to have an impact on inflation.”
Buchholz, whose association represents 54 savings banks in western Germany with a good six million customers, 1164 branches, over 22,000 employees and more than 160 billion euros in total assets, is now calling on politicians to act. “Because today’s inability to save is tomorrow’s poverty in old age,” warns the banker.
And many households are already making savings. “We are currently seeing a decline in deposits,” describes Buchholz. “Money is draining from the accounts. We feel that clearly.”
And given their broad customer structure, the savings banks are a reflection of society, so the observations are quite representative. “It is the task of politicians to support the affected households. This is also how I currently understand the nine-euro ticket and the reduction in energy tax on fuels. But we will see other decisions here, I’m quite sure of that. Because we are currently experiencing how inflation is driving the division of society. And this split arrives directly in people’s experience.”
Buchholz fears particularly big problems due to the emerging financial bottlenecks in households in the real estate sector. “We will experience a significant slump in the construction industry in the next few years,” predicts the savings bank representative.
It is true that the current situation has not yet arrived in the loan commitments. On the contrary: In the course of the year to date, the institutes affiliated to their association have even increased their loan commitments for home purchases.
But that should change quickly, Buchholz believes, referring to the sharp rise in financing costs. “Anyone who takes out a loan of 500,000 euros for a property now has to spend 10,000 euros more than in 2021.” The development is rapid, something she has never experienced before. “We dance here on the volcano.”
The professor and former general manager of the Federal Association of Public Banks in Germany does not yet see a real estate bubble in Germany that is about to burst. “But there is already a risk that follow-up financing will no longer be affordable for many households.” She expects that many will lose their house. “If a customer doesn’t have the ability to save, then they don’t have the ability to repay a loan.”
“Everything on shares” is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.