According to an analysis, the monetary policy of the European Central Bank, which has been extremely loose for years, has not changed the distribution of wealth in Germany significantly. There are winners and losers in all asset classes, the employer-related Institute of the German Economy (IW) determined on behalf of the Family Businesses Foundation. Not only the economic situation (poorer or richer), but also living conditions (property or rent), place of residence (city or country) and age determine whether or not people have benefited from the sustained low interest rates and the rise in real estate prices in particular.
"Households that bought and financed property in the pre-crisis period and were able to lower their borrowing costs when interest rates fell and at the same time benefited from rising property prices benefited from the expansionary monetary policy," the study says.
Financial crisis, euro debt crisis, corona crisis - since 2008 the ECB has been fighting various crises with cheap money.
The key interest rate in the euro area has been at a record low of zero percent since March 2016, and the central bank is pumping billions into the system through huge purchase programs for government and corporate bonds.
Disadvantage of low-risk forms of investment
“While many households can now record lower financing costs and higher real estate price increases compared to the pre-crisis period, these effects are less advantageous for households that do not own a property or that are currently entering the real estate market, despite favorable financing conditions,” explains the team of authors. “The accumulation of wealth and provision for old age are also made more difficult for those households that are dependent on low-risk forms of investment due to their low incomes and low wealth.” Because savings accounts and many life insurances hardly generate any returns.
Since only slightly higher interest rates can be expected in the future, it is important to support the wealth accumulation of these households, writes the team of authors: An adjustment of the employee savings allowance is overdue. The equity culture in Germany must be promoted more consistently.