In 2023, Finnish households moved funds into deposit accounts with higher interest rates as interest rates rose. During this year, households transferred 7.3 billion euros to term accounts and slightly more than 2 billion euros to investment deposit accounts. However, total household deposits decreased by more than EUR 3 billion in the same period. The majority of household deposits are still in overnight deposit accounts, including current accounts. At the end of 2023, 70.6 billion euros of household deposits were overnight deposits, 10.9 billion euros were term deposits and 27.2 billion euros were investment deposits.
As interest rates rose, so did the differences in interest rates between different deposit accounts. The average interest rate on term and investment deposits of households increased rapidly at the end of December 2023, with an average rate of 2.70 percent for term deposit portfolios and an average rate of 2.46 percent for investment deposit portfolios. The average rate of overnight deposits also increased to 0.46 percent at the end of December. At the end of the year, the average interest rate on household deposits as a whole was 1.18 percent.
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In Finland, new term deposit contracts entered into by households had an average interest rate that decreased slightly from November to December at around 3%-4%. This is down from July when it was around 5%. In December, new term deposit contracts had an average interest rate that was slightly higher than the Eurozone’s average but down since November by about half a percentage point.
The rest is a statement from Bank Finland which highlights some interesting data points:
– Household savings decreased by over EUR $15B in just one year.
– Overnight deposits are still a large portion (around two thirds) of total household savings.
– Interest rates on these overnight savings have been increasing steadily over time.
– The Bank predicts that interest rates will continue to rise over time as inflation continues to decrease.
Overall this article provides valuable insights into how changes in interest rates can affect consumer behavior and savings habits in Finland