Interest rates on several bank investments are changing in line with inflation. The interest rate on the Livret A passbook savings account will rise to 2% on August 1, 2022. The rate on the Plan d'Epargne Logement (PEL) could also be revalued in 2023.
Banks announce major provision reversals
Rising interest rates not only enable banks to increase their interest margins on the loans they grant. It is also loosening the constraints on certain savings products, including the PEL. A number of banks have already reversed provisions for home savings products, believing that they will have less of an impact on their accounts in the future.
Crédit Agricole, which accounts for the majority of PEL outstandings (109 billion euros at the end of 2021), has announced net income, Group share of 2,769 million euros for Q2 2022. This quarter's specific items had a net positive effect of 322 million euros on net income, Group share, including a 254 million euro positive impact for provisions for home purchase savings plans. Société Générale is following this trend, with home savings reserves down 30% in 6 months, from 316 million euros at the end of 2021 to 222 million euros in June 2022.
PEL yields could soar in 2023
While the Livret A interest rate has been multiplied by 4 since the beginning of the year, this is not the case for the PEL. It has to be said that the characteristics of this investment are different: high ceiling, compulsory deposits, forbidden partial withdrawals, limited lifespan... The remuneration of the PEL also follows a different logic from that of the Livret A, as its rate is said to be "generational", meaning that it is defined at opening for the entire lifespan of the plan. What's more, the calculation formula used by the public authorities takes "swap rates" of different maturities as a benchmark, rather than inflation or short-term interbank rates.
However, this trend is set to change in the coming months. Monetary policy has evolved in an attempt to contain inflation, with a concomitant impact on swap rates. As a result, the PEL technical rate calculated each month by the Banque de France is rising. It passed the 1% threshold in April and now stands at 1.65%. According to the institution, the next increase is scheduled for January 2023. This is good news for savers wishing to open a PEL. On the other hand, the rise in rates is less attractive for those planning to take out a PEL loan, a regulated-rate loan based on the amount saved in the PEL.