Euribor does not count. Central banks pledge. There will be no relief for the mortgage debtor.
This is what the messages sounded like after the ECB’s first interest rate cut. More interest rate cuts Christine Lagarde didn’t promise, and not many dare hope for much more.
However, you can also find a positive interpretation in the shadow of interest rate pessimism. It goes like this: people no longer have useless fears or hopeless hopes holding them back from taking out a loan.
And that can mean good things for Finland’s economy.
The psychological change is the following: Last year, the loan taps were tightened by the fear that interest rates could rise no matter how high. This was encouraged not only by the ECB but also by the media.
At the beginning of the current year, fears of rising interest rates evaporated, but immediately after, the interest rate market began to speculate on rapid interest rate cuts. Loan and investment decisions were left hanging because people were waiting for a more favorable time in the style of “if in half a year the Euribor was below three percent”.
Now expectations have moderated, and interest rate fluctuations have decreased. The outlook is clearly more stable than before, and there is only a gradual easing of financing conditions.
Everyone can therefore safely calculate their borrowing costs so that the Euribor rates will be broadly around three percent in the near future. It can hardly get much worse, but there is also hardly much better available. So why wait?
Support for procurement decisions also comes from the fact that purchasing power in Finland has turned upward, and the economy in the euro area has now started to grow.
There should be no retardation brought by uncertainty – in one direction or the other. Everyone just has to define the price for what they are willing to pay for anything.
Good luck with the price negotiations.
One slowdown has also been that the improved purchasing power in Finland has gone into savings, and the Helsinki stock exchange has not offered savers a tailwind. Here, too, there may be a turning point ahead.
In the world, the stabilization of expectations can already be seen as an improvement in the willingness to take risks. The all-time high readings of the US and European stock indices tell us about it. The industry-focused Helsinki Stock Exchange will follow when investments move. The increase in asset values, on the other hand, improves consumer confidence, and it can translate the strengthening of purchasing power into acquisitions.
I hope that after the summer holidays, we will be able to read about how in Finland we are no longer afraid of the future, but start living again.