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Livret A, PEL, life insurance… What investments have been boosted by higher interest rates?

The European Central Bank will raise key interest rates in July. Thus, many savings products could see an increase in their rates in the coming months. explanations.

It is the end of an era. For years, the European Central Bank (ECB) has been pumping money continuously to support the European economy. But the situation is changing. In May, inflation in Europe 8.1%It is the highest level since the creation of the eurozone. result? To stop the price hike, the European Central Bank no longer had a choice. The Foundation announced, Thursday, June 9, on the occasion of the convening of the Board of Governors, the end of the asset purchase program, as well as its reassessment. 25 basis points of its prime rates, effective as of July 1 next one.

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Gradual increase

The increase is still calculated for the time being. On the one hand, to avoid a slowdown in the economic recovery, already weakened by the loss of purchasing power of households. On the other hand, to avoid defaults on debt-laden countries, such as Spain, Italy, and, to a lesser extent, France.

Given the level of inflation, key rates should be close to that 5 where 6%, estimates the economist Philippe Crevel, director of Cercle de l’pargne. However, even after the July hike, the ECB rates will only be -0.25% for the deposit price, 0.25% for the refinancing rate, and 0.5% for a marginal lending facility. This change in monetary policy represents a turning point for the European economy. It is the end of the low interest rate environment that has prevailed for several years, Philippe Crevel continues. Especially since the President of the European Central Bank, Christine Lagarde, has already warned about it More price hikes Planned from September.

The first consequences are clearly visible: according to the Bank of France, mortgage rates have moved from 1.10% In December more than 1.25% in May. But if price hikes are bad news for some asset classes, such as stocks, cryptocurrencies, and real estate, traditional savings products may take their toll.

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1. Handbook A

The first major price hike winners, Livret A and its pseudo-twin, Livret de développement Permanent et Solidaire (LDDS), should earn you more as of August 1. The bounty of these brochures was already reassessed last February, starting from 0.5 1%. But an additional rise appears to be possible.

Every 6 months, the Bank of France calculates the theoretical rate for savings accounts in Livret A based on Arithmetic mean Between the change in annual inflation, excluding tobacco, over the past half year, and the STR, an indicator based on the interest rates on short-term loans that eurozone banks contract in euros.

However, if the ECB does raise interest rates, commercial banks will have to pass the increase on to their borrowing rates, and the STR will increase, Philip Krivel summarizes. Conclusion: In a previous article, MoneyVox estimated that the theoretical rate for Livret A will reach 2% this summer.

The Governor of the Bank of France, Francois Villeroy de Gallo, also confirmed that the Leveret A rate will be raised on August 1. But he did not specify the amount of the increase. Because the last word is the government. Livret A rate is determined on a discretionary basis, remembers Philip Krivel.

2. Youth Handbook

Livret Jeune should also benefit from higher prime rates. And for good reason: its rate, which is set freely by each bank, should be at least equal to the rate of Livret A. If the rate of Livret A is revalued after the rise of the main rates, then the lower rate of Livret Jeune and therefore automatically increases. On average, the pay for this brochure exceeds the rewards of Livret A of 0.50 points 1 point. HSBC, for example, offers Livret Jeune rmunr 2%.

3. Popular Savings Account

The Livret d’epargne populaire (LEP) corresponds to the highest number between the Livret A rate that increased by 0.5 point and the semiannual average of year-over-year ex-tobacco inflation. However, with inflation 4.8% Then in April 5.2% In May, it is no doubt that this second number will be used to calculate the theoretical rate of LEP.

result? On August 1, the LEP rate can rise 4.5%the highest level since then 14 years. What may accelerate the adoption of this savings product, which is often neglected by savers. Close 50% The French are eligible for an LEP. However, his retention rate is only 13.3%According to the 2020 report from the Observatory of Regulated Savings of the Bank of France.

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4. Bank books

Bank books are not a structured savings product. Thus, banks are free to choose their rate of return. In April, the average return on these brochures was 0.09%According to Bank of France figures. And after taking tax into account, I only brought these brochures 0.063%. Historically low.

However, here again, a hike in key interest rates can shake things up. Bank book fees are directly linked to rates money marketsconfirms Philip Krevel, whose prices for these brochures are supposed to increase for the next quarter.

Especially that in spite of their family wages, the amount owed from the books of the banks keeps on growing. At the end of March he arrived around 220 billion euros5 billion more than last year. Related Very competitive marketPhilip Krevel completes. Some brands may be inclined to do so raise their rate Quickly to seize market share.

Despite inflation and Livret A, the books of the banks are not taking off

High rates for term accounts

In the wake of the banks’ books, term accounts benefit from higher future interest rates. These savings accounts offer more attractive bonuses, subject to blocking your funds for a certain period of time, which generally ranges from 3 months to 5 years. The Distingo account offered by PSA Bank now offers a guaranteed total annual return of up to 1%. Now up to 1.70% on your Klarna account for 4 years.

See our selection of the best term accounts

5. ELP . program

Since 2011, the Banque de France can adjust the rate of the Housing Provision Plan (PEL) every year. To its credit, the institution relies on the risk-free rates of the European money market, known as switch, opportunity 2, 5 and 10 years. In detail, the integrated formula 70% 5-year swap rate and 30% The 10-year average minus the two-year average.

Theoretically, higher prime rates should lead to a reassessment of the returns provided by PEL (1% before tax since 2016). If so, the new price should be published by December 5, 2022 at the latest. However, here again, the government can decide to waive the rule.

The peculiarity of the General Penal Code: the rate of remuneration is fixed at the beginning of the contract and does not change after that. In other words, Only new subscriptions will be affected In the case of reassessment of the PEL rate. What may revive this investment, whose percentage of ownership has continued to decline since 2016 to reach it 19% in the year 2020.

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6. Euro Life Insurance Funds

The average return on euro money was 3% In 2011. But after 10 years of regression, it has become so 1.30%. Today, the Euro money slowdown may be about to end. Because the savings on the Euro money are then invested Equivalent to treasury bonds (OAT), that is, in government debt securities, explains Philippe Crevel. However, OAT rates are partly linked to European Central Bank rates.

The anticipation of higher key interest rates is already producing its first effects: On May 15, the 10-year OAT was 1.5%. A month later, he progresses 2.33%. Philip Krevel believes that the rise in key interest rates will only reinforce the upward movement already observed since the beginning of the year in OAT treatments.

However, you will have to wait a little longer before noticing a real difference in your Euro money returns. Much of this money is already invested in old bonds. So there is a strong inertiaUp and down, continues the economist.

to New Euro Funds Can, however, see the light of day, trying to capture the current good levels of OAT rewards, and offering higher returns. In response, traditional insurers can, for their part, dive into euro money reserves to prevent the gap with these new funds from becoming too large.

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