Interest rates too high

SPÖ wants to give excess profits from banks to house builders

The ECB has raised the key interest rate, but savers are not feeling the effects.

(Bild: dpa/Frank Rumpenhorst)

Skimming off excess profits from banks and giving them to house builders - the SPÖ is pushing ahead with a new proposal that will meet with little enthusiasm in the banking world. The Social Democrats have long been calling for a rent cap for people who rent. Those who build their own home should benefit from an interest rate cap instead.

This is to be financed with the banks' excess profits. For a year now, the SPÖ has been pointing out that the black-green government can no longer stand by and watch the banks go about their business. The ECB had increased the key interest rates, but the banks did not pass these interest rates on to savers to the same extent, instead only sharply increasing the interest rates for house builders, the Reds criticize.

Excess profits at the expense of savers and borrowers
In the years of the inflation crisis, banks have made a leap in profits of around 220 percent (compared to the average of the pre-crisis years). The banks' profits in 2023 amounted to 14.1 billion euros. "Normal" profits since 2017 have been around 6.5 billion euros. The government has done nothing about this. "The banks are making their excess profits at the expense of savers and borrowers. People with variable-rate loans in particular are heavily burdened by the massive rise in bank interest rates," says the SPÖ.

(Bild: Krone KREATIV, stock.adobe.com)

Equity remains unchanged
Another point of criticism from the Reds: The banks are not using the money to build up equity for worse times. Three banks were among the five largest profit distributors of all listed companies in 2023. "So the winners of the inflation crisis are the bank shareholders, the losers are the bank customers."

SPÖ: The ÖVP is on the side of the banks
"The ÖVP-led government has done nothing to combat the highest inflation rate in Western Europe, nor has it put a stop to the massive increases in bank profits - for example by regulating interest rates. The stupid ones in this game are the savers and house builders in Austria. Once again you can see which side the ÖVP is on," says SPÖ finance spokesman Jan Krainer.

An example

A young family took out a variable-rate loan for 25 years 5 years ago and now has an outstanding loan amount of 200,000 euros - the remaining term of the loan is 20 years. Interest rate when the loan was taken out: 1.5 percent
Interest rate now: 5 percent

The differences in the monthly charges are enormous.

Family with a variable loan	1.5 % interest rate	5 % interest rate
Monthly installment	965 euros p.m.	1,318 euros p.m.

The young family with a variable-rate loan pays a monthly installment of 1,318 euros at an interest rate of 5%. With an interest rate of 1.5%, it was only 965 euros per month. A difference of 353 euros per month or 4,236 euros per year.

What is the SPÖ demanding? 
 The SPÖ is calling for all existing real estate loans to be capped at three percent, financed by an excess profits tax on banks. With an affected loan volume of 60 billion euros (around 500,000 house builders), an interest rate cap would cost around 900 million euros per year. This would be financed by the excess profits. To this end, a special levy on bank profits is to be introduced for a limited period over the next five years. This will raise a total of four billion euros (equivalent to 1/3 of the total excess profits from 2022 and 2023), the SPÖ calculates.

SPÖ promises fairness
The SPÖ will put this model to the vote at the upcoming National Council meeting on Wednesday. "After record profits for the energy companies, now record profits for the banks: the last few years have shown what it means when the SPÖ is not represented in the government. If the banks do not treat their customers fairly, politicians must ensure fairness and respect", said Krainer.