Interest rates in the euro zone remained low through January, the European Central Bank reported on March 3rd. Loans by commercial banks to non-financial corporations averaged an annualized rate of 1.43%, the same as in October last year and only marginally up from November (1.39%) and December (1.36%).
The average interest rate on loans to non-financial corporations has remained below 1.5% for a full year, with the exception of April last year (1.56%). Over the longer term, the average rate has declined since March 2014 when it stood at 3.01%.
Interest rates on home-buying loans for households, a.k.a., mortgage loans, have followed the same pattern as corporate loans. After averaging 3% in March 2014, these loans dropped below 2% in June 2016 and currently (January 2022) stand at 1.33%.
With interest rates on loans at historic lows, commercial banks offer negative interest on deposits. As of January 2022, euro-zone banks paid an average of -0.3% on agreed-maturity deposits by non-financial corporations, marking the eighth month in a row with at rate at or below that figure.
Interest on deposits have been consistently negative since November 2019. April 2013 was the last month when deposit rates exceeded 1%.
Households still earn a positive rate on their bank deposits. In January this year, the average annualized rate was 0.24%. This is very close to its average rate since it fell below 0.3% in April 2020. Following the pattern of other interest rates, the rate on household deposits has fallen steadily since 2013, the last time it stood above 2% (May, 2.06%).