What lets people who think about taking out a loan shine happily, provides savers in the last few weeks and months, if not years for pronounced forehead wrinkles: We are talking about the so-called interest slowdown, which again by the last ECB interest rate decision was forced. Since then, the terminology of negative interest rates has been haunting in financial circles over and over again, which means, in plain terms, that banks can procure cheap liquidity in the form of loans at virtually no cost on the capital market. To date, the end user has not (yet) benefited from these extremely favorable credit conditions on the capital market for banks, but thanks to the initiative of a bank in Germany, a similar turn is now emerging here. For example, a German development agency wants to award corresponding premiums if a loan is to be taken out.
Favorable conditions for a loan should be passed on!
According to a report by the Handelsblatt, the bank, which at least discusses such an initiative for the granting of loans with negative interest rates at least once in a while, is the well-known agricultural Rentenbank. According to the chairman of the bank, Horst Reinhardt, the financial institution under his leadership wants to be the first and so far only bank to pass on the extremely favorable conditions to which it can obtain liquidity in the form of loans thanks to the low interest rates of the European Central Bank. In plain language: The bank itself already now money for it in the form of a loan which lends – similar to other institutions too!
What sounds quite logical up to this point and certainly very enticing in the ears of a consumer, has, however, at the present level, a downer. In the same breath, Mr. Reinhardt also emphasizes that these new loan conditions, which are planned by Landwirtschaftliche Rentenbank, can not be transferred to end customers. Because: Rentenbank awards its loans exclusively to the competition via the “classic” house banks, which in turn determine their own terms and conditions for their customers.
Premium for a credit does not (yet) apply to end users!
Even if the Rentenbank’s initiative seeks to pass on the self-favorable conditions for a loan from the capital market to other institutions involved in the credit system, which would correspond to a premium for a loan, there are legitimate doubts as to whether this will “someday”. once arrived at the end user. Although other development banks are already announcing a similar approach due to the negative interest rate situation on the credit market in the future, the question always arises as to whether the classic financial institutions will follow these examples! Certain doubts are certainly justified, since the business with loans and the corresponding sales respectively profits from the interest income of these loans is one of the most important sales pillars of banks. To what extent the traditional banks could declare their willingness to act on such a far-reaching change of credit conditions in the interest of the consumers may be questioned. Which bank would like to give up such a steady source of revenue, or even give away money?