It's not certain yet, but the signals are growing: In July, the European Central Bank (ECB) could raise interest rates for the first time in more than ten years.

In concrete terms, it would probably be Thursday, July 21, when the ECB Council, the central bank’s highest monetary policy body, would meet on that day – an interest rate meeting that would then have earned its name for the first time in years.

At around 1.45 p.m. the first press release is likely to come, after which ECB President Christine Lagarde will insist on explaining the details in a press conference.

There is no question that that evening even the daily news will report prominently on the first interest rate hike in the euro area.

Christian Siedenbiedel

Editor in Business.

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It is expected that the central bank will be somewhat cautious with the first rate hike and will only raise interest rates by 0.25 percentage points.

Anything else would be unlikely, says economist Karsten Junius.

Even America's central bank, the Fed, took the first step.

It is still somewhat unclear whether the ECB will raise all three key interest rates – the deposit rate, the main refinancing rate and the top lending rate – in parallel, as was usually the case in the past, or just the deposit rate first.

The latter determines how much the banks have to pay for their deposits at the ECB after tax allowances.

This interest rate is currently minus 0.5 percent.

After the first rate hike of 0.25 percent, it would still be minus 0.25 percent.

What happens to the savings interest?

But what then happens to savings book interest, construction interest and the negative interest on the current account?

The ECB can only set the key interest rate directly.

On the same day, however, there could be reactions from investors on the capital market: These then affect the capital market interest rates, which can be read from the bond yields.

They are influenced by different factors, and the extent to which an interest rate hike had previously been expected is also important for the reaction of the markets.

In any case, the experience with the first interest rate hike by the American Federal Reserve was that bond yields went up for a short time, says economist Holger Schmieding: “With the Fed, yields initially rose a little on the day of the first interest rate hike on March 16,

It will be interesting to see how the banks then proceed.

It is unlikely that the committees of all banks will meet on the first day of the ECB interest rate hike to raise interest on savings accounts.

One or the other institute could perhaps use the ECB interest rate hike in marketing for an investment product - under the motto "Interest rates are back".

However, Max Herbst from FMH-Finanzberatung believes that it will take a while before there are reasonable interest rates for savings deposits again: "We only see overnight interest rates of 0.5 percent at a key interest rate of 0.5 percent and higher." In view of the high inflation remained interest on savings is practically “nothing”.

The interest rates for installment loans, on the other hand, are likely to rise somewhat, says Herbst.

Interest rates are likely to rise

Interest rates will definitely go up.

However, the credit broker Interhyp does not expect that to happen directly on July 22nd.

"The building interest rate depends less directly on the key interest rate and more on the returns on long-term bonds and Pfandbriefe - and expectations of inflation and future monetary policy have an influence on these," says Interhyp board member Mirjam Mohr.

"Even in the past, we usually did not see any direct influence on the building interest rate when decisions were made on the key interest rate, but rather before and afterward, because the markets take into account the expectations of the decisions." The interest rates for ten-year building loans have been 0.93 since the beginning of the year to 2.61 percent - in the summer it could be 3 percent, says Herbst.

In the medium term it is conceivable that these higher interest rates will have a negative impact on real estate prices.

If construction loans become more expensive, this weighs on price developments.

However, dramatic movements are not to be expected with the first small ECB interest rate hike: "Prices will not collapse, at least for the time being," says Reiner Braun from the real estate institute Empirica.

Movement is expected in custody fees

It will be exciting to see what happens to the custody fees and negative interest rates on call money and current accounts.

A first reaction on the day of the ECB interest rate hike would be conceivable: After all, the conditions of some banks state that the amount of the custody fee is linked to the ECB deposit rate.

However, there are already the first banks that are increasing their tax allowances for negative interest: ING is increasing its tax allowance to EUR 500,000 on July 1st, practically eliminating negative interest for many customers.

The Stuttgart banking professor Hans-Peter Burghof says there could be three overall strategies for how the banks react: Institutions with more passive customers may try to simply continue to collect the negative interest rates, even if the ECB relaxes its negative interest rates.

A second strategy would be to pass on the easing one-to-one.

A third option would be to use the ECB's first rate hike as an opportunity to completely abolish negative interest rates for customers as a bank.

However, it is unclear whether all banks are already doing this.

The first interest rate hike by the ECB in more than ten years will then be a drastic event - but by no means the real end of the low-interest phase.