How saving and borrowing in Austria have been hit by ECB rate cuts

What happens in Frankfurt doesn’t stay in Frankfurt—at least not when it comes to your money.

The European Central Bank (ECB) may be headquartered more than 700 kilometres from Vienna, but when it changes interest rates, people in Austria feel the impact quickly.

With inflation easing and the ECB starting to cut key interest rates, the effects are already showing up in how Austrians save and borrow. 

Here’s how the recent rate decisions affect everyday life.

Savings rates are falling, but still tempting

Austrians are known for being enthusiastic savers—and recent ECB decisions haven’t changed that. 

READ ALSO: Why buying property in Austria remains unaffordable for most

According to the Austrian National Bank (OeNB), households saved €19 billion more in 2024 than they withdrew, resulting in total deposits of €322 billion. Most of that—over €200 billion—is in daily (or overnight) deposit accounts, which offer flexibility but usually come with lower interest.

That said, tied (fixed-term) deposits have also been popular. Even though rates have dropped from last year’s highs, some banks still offer up to 2 percent for a 12-month term. On average, though, the return is closer to 1.2 percent—down significantly from a 2.59 percent average a year ago, the OeNB reported.

So while interest on savings is falling, those who shop around can still find relatively attractive rates.

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Mortgages are becoming more affordable again

If you’re planning to take out a home loan, the ECB cuts may offer some relief. 

Housing loan interest rates in Austria dropped by 0.8 percentage points in 2024, averaging 3.51 percent by the end of the year. As of May 2025, they had edged down further to around 3.4 percent, close to the eurozone average of 3.32 percent.

READ ALSO: Can I get a mortgage in Austria as a foreigner?

Interestingly, the so-called “inverted yield curve” still holds: variable-rate loans remain more expensive than fixed-rate ones. That trend has continued since early 2023, prompting most Austrians to lock in rates—around 89 percent of new housing loans in 2024 were fixed-rate.

More people are borrowing again

Lower interest rates are also driving up demand for credit. Residential construction loans rose by 25 percent in the second half of 2024 compared to the previous year, and the upward trend has continued into 2025. 

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According to the OeNB’s Bank Lending Survey, banks expect demand for housing loans to keep growing through the third quarter.

One key reason?

Higher real incomes are giving people more financial breathing room, making it easier to finance home purchases or renovations. As the ECB continues its cautious path of easing, borrowers may find even better conditions ahead – though savers might need to search harder for decent returns.