Will 2023 finally be the year of the saver?

Until last fall, the European saver was living in a world of zero interest rates. Since then, the situation has changed radically with the historic central bank tightening cycle; in August the ECB deposit rate, the rate at which banks make overnight deposits with the central bank, was still at zero but is now at 2% - and further increases are expected early in the year. The Swedish central bank started raising its deposit rate a little earlier in the summer, and the rate there has risen above the eurozone level.

The rise in interest rates has also changed the landscape for savers and borrowers. Whereas the era of zero interest rates benefited borrowers and punished savers who kept their money in their accounts, now savers can finally get a return on their money in the form of interest, while borrowers are struggling with rising mortgage rates.

However, not all depositors will be affected by the year 2023, as the interest rate offered on current accounts is still zero in almost all Finnish banks. However, many banks have a positive interest rate on savings accounts, and in Finland and Sweden it’s possible to earn over 2% interest on one-year fixed-term deposits. The change in fixed-term deposit rates is substantial, as can be seen in the graph below, and the trend is expected to remain upwards.

Source: Bloomberg

Household interest yields have thus clearly improved, but are still losing out to inflation, which surged above 9% in the eurozone and Sweden at the end of the year. In real terms, interest yields are therefore still negative, which discourages people from saving in their accounts.