The passbook A rate will drop to 3%

The Minister has thus followed in the footsteps of the Governor of the Banque de France who had proposed to him a little earlier, on January 13, to increase the rate of remuneration of the livret A, the main savings tool for the French, to 3% to from February 1. If the calculation formula, taking into account on the one hand the rise in prices – which reached 5.9% in December according to INSEE – and on the other hand the interbank rates, at which the banks exchange short-term money, had been applied to the letter, the rate would even have been increased to 3.3%.

But the governor of the central bank François Villeroy de Galhau preferred to round slightly downwards, citing in a press release “exceptional circumstances”. “It’s still three times in a year”argued Bruno Le Maire on France 2. Still at its lowest level of 0.5% a year ago, the Livret A rate had doubled for the first time on February 1, 2022 and then again on August 1, to reach 2%.

For the Banque de France, it is desirable “that the rate movements of the livret A remain progressive rather than too volatile, and this upwards as a potentially downward day”. Less well known than its predecessor, the Sustainable and Solidarity Development Booklet (LDDS) also benefits from this 3% increase.

Financing of social housing

The approximately 500 billion euros deposited by the French in savings accounts A and LDDS, the major part of which is centralized by the Deposit Fund (CDC), are intended in part to finance social housing, the social and solidarity economy or even energy savings in housing. If the increase in the rate is good news for savers, it is less well received by many public players, whose loans from the CDC are often indexed on this rate.

A rate “too high would be very unfavorable” to “financing of social housing and urban policy”, argues the Bank of France. The “social housing organizations […] are in good financial conditionhowever, pointed Tuesday the director general of the Caisse des dépôts Eric Lombard before the finance committee of the National Assembly.

USH welcomes “balanced decision”

The Social Union for Housing, which brings together all social landlords, welcomed, in the wake of the announcement, “a balanced decision” from the government. “This increase has a strong impact for social housing organizations”, recalled the USH. In effect, “with an outstanding debt of around 150 billion euros subject to variations in the Livret A rate, Hlm organizations are very directly exposed to changes in the rate of remuneration of these savings accounts”.

“Very concretely, with the Livret A rate going from 0.5% to 3% in one year, the interest charges of social housing organizations will be increased by 3.75 billion euros over a full year, heavily on their operating results and their ability to invest, already affected by the general rise in inflation and more particularly in the cost of works”said Emmanuelle Cosse, president of the HLM Movement.

Banks less enthusiastic

The rise in the rate is also coldly received by the banking establishments which keep part of the deposits of regulated savings in their coffers. Banks fear that too large a hike “of the rate of the livret A does not make it very attractive and encourages too many savers to turn away from insurance investments”says Eric Dor, director of economic studies at the IESEG business school.

Among the returns announced since the beginning of the year by managers of euro life insurance funds, none has so far reached the 3% mark.

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