Opinion: "The three significant changes in our wallets during the 'Euribor year'"

"The year 2023 can confidently be characterised as the 'Euribor year,' as alongside all goods and services, money itself became more expensive, bringing several significant changes to Estonian households," summarises Jonna Pechter, the head of Bigbank Estonia, who also forecasts which direction the three most talked-about trends of the new year will take.

"With the increase of Euribor, every homeowner's wallet inevitably took a hit. For instance, a family with a 600-euro home loan at 0% Euribor in mid-2022 would now, one and a half years later, have to pay 980 euros for the same loan. The difference is significant, and the only slight consolation is that this number should gradually decrease again in the coming year," described Jonna Pechter, who also highlighted how life became much more complicated for new homebuyers. "At an equivalent income level, an individual's loan capacity also significantly decreased. If at the beginning of the year a family with a 3000-euro income could get a maximum home loan of 235,000 euros, by the end of the year at 4% Euribor, it would be 205,000 euros," the head of Bigbank provided an example.

However, as the cost of money increased, Pechter noted that it also brought many new opportunities for those who had accumulated some savings. "Just a year and a half ago, major banks were offering zero interest for term deposits, but the loud pressure from smaller banks brought a change across the market. We are not likely to see interest rates reaching up to five percent in the new year, and for those seeking a safe place to invest their money, today might just be the last day even for 4.5%," forecasts the head of Bigbank regarding the upcoming changes, emphasising that even the profitability of demand for deposits, or savings deposits, which reached up to 3%, is likely to decrease next year.

"A third significant change, from a perspective of financial wisdom and investing, was the sudden surge in the popularity of bonds and relatively high interest rates. I dare to say that we won't see another year as good as this one anytime soon, and just a couple of years from now, people will reminisce about 2023, when banks offered eight percent interest or even more on bonds, with great envy," asserts Pechter, who actively engages in small-scale investing herself.

"For many families, the changes of the past year unfortunately meant making several difficult decisions and sacrifices. Although I firmly believe that Euribor will decrease over the next year and life will become easier with home loans, the upcoming tax hike will unfortunately put new pressure on family budgets," comments Jonna Pechter, and concludes the topic of changes on a brighter note: "The rapid rise of Euribor brought about one very positive trend - along with the increase in the cost of money, a considerable amount of financial wisdom and the ability to better plan one's family budget also emerged. So, we are all wiser and can handle the new year!"