Life insurance, booklets: will the drop in BCE rates bring your yields falling?

New rate drop for the European Central Bank (ECB). A decision that will have an immediate impact on the remuneration of certain investments.

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The European Central Bank (ECB) continues on the momentum of 2024. Slowness of inflation requires, the Frankfurt institution announced, this Thursday, January 30, a decline of 0.25 point of its deposit rate, which thus passes From 3% to 2.75%. After having already lowered the cost of money four times in 2024 – including the last time in December -, the ECB therefore continued its cycle of reduction of its guiding rates in 2025.

But what does that mean for individuals? Ultimately, borrowers can hope for a drop in the rates of their mortgage, even if it is slow to materialize. More directly, this new BCE decision, however, will have a mechanical impact on the remuneration of your savings. The yield of investments, in particular not very risky, are indeed correlated at the level of guiding rates.

Banking booklets, term accounts, current accounts

Banking savings products, such as booklets, term accounts or rare paid current accounts, are the first impacted by the drop in guiding rates. Indeed, the main key rate of the ECB, the deposit rate, is decisive for their remuneration: “This rate changes the yield obtained by banks when they drop their money from the ECBrecalls Olivier Maltete, director of investments at Yomoni. Thus, when he drops, banks lose compensation on their deposits, and they therefore lower the rates granted to their customers. ”

A drop in yields which is generally observed one to two weeks following the announcement of the ECB. If you still want to benefit from attractive rates on a term account, or from a boosted rate on a super booklet, you must therefore react quickly. On the other hand, do not worry about the rates of “regulated” booklets (booklet A, LEP, LDDS), the remuneration of the latter is indeed fixed by the Minister of Economy twice a year, and it will therefore move Not between February 1 and August 1.

EUROS FUND INSURANCE

No immediate fear either to have the remuneration of your life insurance contract invested in euros funds. Indeed, the rates served on these guaranteed capital supports do not vary day by day, but are set once a year by the insurer, depending on its commercial policy and the performance of a financial portfolio invested mainly in long -term obligations (whose lifespan is on average 8 years). However, conversely, ECB’s guiding rates first have an influence on short -term bond rates.

However, it is true that over a longer period, if the ECB continued its rate of rate drops – three other decreases are anticipated by this summer -, the remuneration of your fund in euros could be impacted: “The key rates influence the yields of long -term bonds, but it takes more time”confirms Olivier Maltete. Nevertheless, insurers renewing only about 1/8th of their stock of portfolio bonds each year, the return on your life insurance contract will therefore not be the big difference between 2024 and 2025.