Persuade immigrants to northern Europe

Author/Ding Ding (Suzhou native, living in Europe for many years, now living in Berlin, Germany)

[Editor's note] We have witnessed another period of history. On July 2 1 local time, the European Central Bank announced the interest rate resolution, which raised the three key interest rates by 50 basis points, exceeding the previous expectation of 25 basis points. This rate hike is the first time in 20 1 1 year, and the rate hike is also the largest in the past 22 years. The interest rate hike also announced the end of the era of negative interest rates in Europe that lasted for eight years. Analysts said that the interest rate hike was mainly to cope with the increasing inflation in the euro zone.

For ordinary people in China, I'm afraid it's hard to understand what the negative interest rate on bank deposits is like. The author has lived in Germany, a country with relatively good European economy, for many years. What is the relationship between ordinary people and banks under negative interest rates? Do people deposit money in the bank? How to manage money? How to operate a mortgage car loan? Now, let's listen to what she said about the life of ordinary people in Europe in the era of negative interest rates.

The headquarters of the European Central Bank in Frankfurt. clang

Five years ago, I worked in the international office of a business school in Germany and received a domestic banking team. One of them asked me curiously, if I put my money in a bank in Germany, how much interest would it be? I was stumped at once.

In my impression, it seems that Germans and even most European countries don't have the concept of saving money and collecting interest, and they don't care much about the deposit interest rate of accounts.

My own account, the deposit interest rate is negligible. It's been a long time, and I almost forgot that putting money in the bank to collect interest is also an important way to manage money in China.

The streets of Berlin, Germany.

Before writing this article, I checked again and found that the interest rate of my current account has dropped to zero. Fortunately, I have a certain income every month, otherwise, according to the regulations, the bank will charge a few euros in management fees every month.

Not only can you save money without earning interest, but you can also pay back the bank's money, which is unimaginable in China.

Not only the bank where I opened the account, but also the deposit interest rates of other banks are terrible. Even if we look at neighboring countries, the best interest rate I find is 0.8% offered by Italian banks for time deposits below 65.438 billion euros. This was a year ago, and now Europe has announced a rate hike. It is estimated that it will rise a little?

In Europe, Germans are famous for their economy.

According to statistics, 8,000 Dovander citizens have 2.3 trillion euros in their accounts, which is not much different from China, which is known as the largest saver. According to the latest survey, only 17% of Germans are moonlight people and don't save money at all. More than half of Germans save 50 to 400 euros a month.

Of course, due to high taxes and high consumption, Germans only save 1000 euros every month.

In addition to saving money, Germans are also notoriously conservative in their attitude towards investment. Many people just save their money without making any other financial investments. Buying a house is afraid of debt, buying stocks is afraid of falling, especially now I don't know if there is a bubble in house prices and the stock market is in turmoil.

I have seen street interviews with German media. Many people say that even if you deposit money in the bank, there is no interest, you will only save it, and you will not do financial management.

At the local flea market in Berlin, some people are selling small commodities.

If zero interest rate can be tolerated, then collecting deposit management fees is really "urging".

In recent years, in order to maintain profits, German banks have introduced charging policies. Unless the account has money every month, the management fee will be more than 5 euros, which is tens of euros a year. Therefore, most people cancel all unnecessary accounts except the bank accounts necessary for daily life. According to reports, after the German commercial bank announced the charges last year, the cancellation rate of accounts suddenly increased by 9 times, and the cancellation rate of online bank Comdirect was 250% of the weekly average of 1 1.

Supermarkets in Berlin, Germany.

Now most countries in western Europe and northern Europe have entered the era of cashless payment, while Germany is still a cash country.

In addition to depositing in the bank, Germans also like to deposit cash at home. Needless to say, the most unexpected thing is that after the euro has been circulating in Germany for 20 years, according to the statistics of the German central bank, the German people still hold about 5.77 billion marks of banknotes and 6.665438 billion marks of coins.

According to the law, these German marks can no longer be circulated in the market, but they can be exchanged at the Bundesbank indefinitely. Every year, people find marks in drawers, sacks, shopping bags and even books, and then go to the central bank to exchange them.

In 20 19, a young man was going to sell his late uncle's house because he had to pay a large sum of money, but he accidentally found that there were 3.5 million marks hidden in the house, and almost two marks could be exchanged for 1 euro, which was equivalent to a large windfall, so he didn't have to sell the house.

In 2020, the Bundesbank exchanged 53.4 million marks of old currency for the people. In addition, quite a few Germans are not in a hurry to change their marks into euros and keep them in their hands.

A construction site in Berlin. As far as income is concerned, local housing prices are not expensive, but there are not many young people in Germany who are willing to buy a house.

While the deposit interest rate is low, the financing interest rate is also low. The advantage for ordinary people is that the interest rate of housing loans is much lower than that in China.

Take the mortgage with interest rate of 10 as an example. The loan interest rate was around 6% 20 years ago and maintained at 3% 4% 10 years ago. In the past five years, the mortgage interest rate tied to 10 has dropped to 1% 2%. At the same time, due to the influx of a large number of foreign immigrants, the balance between supply and demand in the rental market has been broken, especially in a big city like Berlin, where a room is often hard to find.

As a result, wealthy people in Eastern Europe, Indian immigrants from China, including a few Germans, bought houses and got on the bus.

But there are many German friends around, even if they have the ability to pay, they would rather continue to rent.

Residential areas in Germany.

I asked two German friends in their thirties who have stable jobs, why not buy a house of their own when the down payment is low and the interest rate is low?

According to their economic conditions, they can borrow about 300,000 euros to buy a small apartment, and the monthly repayment may be cheaper than the rent. One of them told me that he didn't want to be in debt for the house at such a young age, in case he had to change his city life in the future!

Although the other party wants to buy a house, he can only buy a small apartment according to his own economic conditions, and he wants to buy at least three rooms and one living room in one step to live comfortably.

The streets of Frankfurt, Germany, are also very lively at night.

With the outbreak of the Russian-Ukrainian war this year, inflation in Europe has intensified, and banks are generally more cautious in lending. Especially in the last two months, the mortgage interest rate in Germany suddenly rose to 3%.

Because of the price increase of raw materials, house prices are still firm, and there is no trend of price reduction. Of course, buying a house is not as easy as it was a few years ago, and many people missed the opportunity to get on the bus. Not only that, it is becoming more and more difficult to save money because of rising prices.

Of course, when it comes to negative interest rates that have been going on in Europe for eight years, it basically belongs to the troubles of the rich.

For example, in the era of negative interest rates, many large European banks announced that they would impose a penalty interest of 0.5% on accounts with deposits exceeding 65.438 billion euros. In other words, if you have 654.38 million euros in your account, you have to pay 500 euros to the bank one year in turn, which is more expensive than the management fee that ordinary people have to pay to the bank 10 times.

Some banks will even lower the fine threshold to 50,000 euros. In this way, in order to pay less, people with more deposits have to cash in or deposit their money in different bank cards, and only pay management fees.

However, these penalty interest policies do not have that great influence on the rich who make good money. A rich friend once told me that after he made money, he went to invest, leaving only more than 10 thousand euros in his bank account for daily turnover. As for the specific investment, people kept their mouths shut.