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How the ECB's monetary policy affects Spaniards' access to housing and savings.


The ECB has raised interest rates nine times since 2021, reaching 2.25% in June 2023. This increase makes credit more expensive and makes access to housing more difficult, especially for young people and those with low incomes. According to market studies, the average house price in Spain has risen 3.5% year-on-year in the first quarter of 2023, and the financial effort to buy a home stands at 34% of income.

Rising interest rates affect young people and low incomes in several ways:

  • It makes credit more expensive and reduces debt capacity, making it difficult to access housing or other consumer goods.

  • The financial effort to pay mortgage payments with variable interest increases, which can cause defaults or foreclosures.

  • Savings and investment decrease, which reduces opportunities to improve the economic situation or create a financial cushion for unforeseen events.

On the other hand, it can also have some benefits, such as

  • Curb inflation and excessive debt, which can improve long-term economic stability.

  • Increase the profitability of fixed income assets, which can benefit conservative savers and investors.

  • A sign of confidence in the economy and stimulus to spending and consumption.

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