Positive effects on the economy
The distinctive features of Bausparen have a beneficial effect on a country’s entire economy. The benefits are far-reaching, and although they primarily affect private households, they also have a positive impact on the real estate sector and the financial system.
The Bausparen savings system is another important tool in a country’s arsenal of financing products. A greater variety of financing products means more competition in the construction financing sector and leads to greater stability in the financial sector. Highly effective products increase the ability to withstand financial crises, which in turn boosts people’s trust in their domestic financial system.
Bausparen has other effects as well:
| Positive influence on saving habits: | The systematic nature of Bausparen encourages people to save. |
| Own funds reinforces the financing process: | During the savings phase, customers build up their own capital, proving their dependability and ability to make regular payments. This in turn reduces the risk of a loan default to a minimum. |
| Lower loan interest rates: | Thanks to lower costs associated with risk factors and the fact that loans are refinanced with funds from customers’ deposits, savings institutions that offer contractual savings plans are able to offer interest rates on borrowed funds that are lower in comparison to the market. |
| Loans issued in the local currency: | Bausparen is implemented in the local currency. This not only makes the individual financing process safer, it also makes the economy more independent from internal capital markets. |
Subsequent benefits for the construction industry
Bausparen funnels funds that have been saved directly to the real estate sector, which also creates positive effects for this area of the economy by strengthening demand in the real estate market. This in turn provides a better cushion for fluctuations in the economy. Investments in the construction industry create major secondary benefits. They create new jobs and financial incentives for construction companies and regional contractors.
Private household also benefit from Bausparen
- Low costs:
As a rule, the total costs for financing implemented through Bausparen are low. For many median- income households, this is what makes housing affordable or even a viable option to begin with.
- Planning certainty:
Thanks to fixed interest rates, savers can plan the financing of their home with peace of mind over the entire term of the loan.
- Higher-quality housing:
Bausparen enables people to take housing into their own hands to improve their standard of living.
- Bausparen reinforce people’s efforts to take responsibility for themselves:
People who become home owners simultaneously assume responsibility for accumulating wealth, contributing to their own social safety net, and last but certainly not least, for planning how to save for retirement.