In the second quarter, the savings ratio likely slipped further as households tapped their financial buffers to offset the surge in fuel costs – a drag strong enough to outweigh any incremental rise in precautionary saving. Looking ahead, with fuel prices easing off their peaks but geopolitical and labour‑market uncertainty still high, precautionary saving is likely to re‑emerge as the dominant force.
Mortgage dynamics will reinforce this shift. With mortgage rates up roughly 20 basis points in countries like Germany, Italy, Spain and the Netherlands – and uncertainty rising – demand for new mortgages is set to cool over the coming quarters, while repayments are likely to pick up.
Until May, mortgage‑debt growth held steady, reflecting the usual lag before shifts in borrowing behaviour show up in the data. A similar pattern was seen in 2022, when the impact of higher interest rates materialised with a delay. However, we don’t expect an adjustment of similar magnitude; the increase in mortgage rates has been much smaller. Even so, we do expect to see slower growth in the mortgage debt stock over the next couple of months. Slower mortgage borrowing reduces the amount of new credit flowing into the economy, dampening housing-related spending and limiting consumption growth. At the same time, faster mortgage repayments leave less room for consumption, leading to higher saving ratios.
All in all, we see only limited upside for consumption in the third quarter. Any lift from easing inflation is likely to be muted once again by a rising savings ratio.